CITY OF MINNEAPOLIS Advance Notice of Sale Ordinance Economic Development & Regulatory Services Committee Meeting October 23, 2018 1
Minneapolis is now a majority renter population; most people of color are renters while white residents are more likely to own instead of rent Renter occupied units have had the larger share since 2010, and renter households are growing faster • than owner households White households are the only households in which the majority are owner-occupied • There are more than 85,000 renter households in Minneapolis – nearly 40,000 are headed by a person of • Color Tenure (Owner/Renter Status) for Minneapolis, 2000-2014 52.3% 88,529 82,579 83,408 78,944 80,777 47.4% 74,047 2000 2007 2014 2 Owner HH Renter HH Source: U.S. Census Bureau, American Community Survey 1-year estimates
Minneapolis renters spend a disproportionate amount on housing • Cost burdened households spend 30% or more of household income on housing. • Severely burdened households spend 50% or more of household income on housing. • Renters represent about 3 out of 4 cost burdened and severely cost burdened households • Of the 89,420 renter households in Minneapolis, 50,000 earned less than 60% of AMI • Cost burden falls disproportionately on households of color, who are more likely to rent than white households 3
Cost-burdened households are disproportionately communities of color • 45% of Black owners are cost burdened compared with 27% of White owners. • About 1 in 2 American Indian households are cost burdened regardless of tenure. Share of racial group that is cost burdened by owner renter status Minneapolis, 2009-2013 59% 52% 48% 48% 48% 47% 45% 40% 33% 32% 31% 27% Black or African- American Indian or other (including Hispanic Asian White American Alaska Native multiple races) Owner Renter 4 Source: 2009-2013 HUD Comprehensive Housing Affordability Strategy estimates
Rental Housing Data: NOAH in Minneapolis • 95,000 rental units • 29% are 1-3 units – limited market data • 71% are 4+ unit buildings – more market data • 4+ unit buildings • About 15,000 units affordable to households with incomes at or below 60% AMI • Average building size = 17 units (compared to 149 units in Class A) • Increase in Sales • 288 unit sales in 2010; 4,005 units sold in 2017 (~8% of total units) • Rents of sold units increased more than rents of unsold units 5
NOAH Preservation Strategy • Incentives for existing NOAH owners • 4d tax incentive pilot: ~40% reduction in property taxes • Support acquisitions that preserve NOAH • Minneapolis NOAH Preservation Fund: $3 million, 0% interest deferred loan to non-profit buyers • Small and Medium Multifamily acquisition pilot (SMMF Pilot): $1.9M per year, partnership with TC Land Bank and Local Initiatives Support Corporation • NOAH Investment Policy: partner w/Freddie Mac; city purchases participation certificate bond, allowing NOAH buyers to get lower mortgage rate • Support tenants • Tenant hotline serving 3,000 renters annually • Tenant Legal Services: legal partners provide tenant representation in housing court 6
Adv dvance ce N Notice ce of Sal ale Or Ordinan ance ce • Supports NOAH Preservation Efforts • Provides tenant protections after a sale occurs 7
Adv dvance ce N Notice ce of Sal ale Or Ordinan ance ce • Notice of Proposed Sale: Owners of NOAH property are required to give notice to the City 60 days prior to making the property available for sale • Notice required to be posted in the common areas of building • NOAH property: • 5 or more units • At least 20% of the units are affordable to households with incomes at or below 60% of the Area Median Income ($56,880 for 4-person household) • Goal: provide potential preservation buyers and tenants information earlier in the process 8
Adv dvance ce N Notice ce of Sal ale Or Ordinan ance ce • Notice of Sale: New owners required to give notice to all tenants of affordable units and the City within 30 days of sale informing tenants of tenant protections • Tenant Protections: • In place for 90-days after notice of sale given • Eligibility for relocation assistance if new owner takes one of the following actions: • Terminates or does not renew lease without cause • Increases rents • Initiates re-screening • Relocation assistance is 3 months rent 9
Adv dvance ce N Notice ce of Sal ale Or Ordinan ance ce • Exceptions • Affordable housing building subject to federal, state or local rent or income restrictions that continue to remain in effect after the sale • Sale or transfer of an affordable housing building to a new owner who participates in or commits to participate in the City’s 4d program • The sale or transfer of an affordable housing building through a 1031 exchange. • Effective Date • January 1, 2019 10
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