$70 million was spent to refresh neighborhoods.
Minneapolis, St. Paul and Brooklyn Park have spent nearly $70 million in federal stimulus money to remodel, sell or demolish more than 1,000 distressed homes and rental properties in the wake of the housing bust and foreclosure crisis that gripped many neighborhoods during the Great Recession.
The once-in-a-generation pot of money has yielded some dramatic results. Along one block in St. Paul’s Dayton’s Bluff neighborhood, for example, the city renovated and resold four historic homes, and four more are in the works. In Brooklyn Park, fresh paint and tidy landscaped lawns are evidence of the city’s efforts near Shingle Creek Parkway and in the Hamilton Park area. In north Minneapolis, new homes are going up in Hawthorne EcoVillage.
The recession and housing crisis wreaked havoc on many working- and middle-class neighborhoods, but it also created conditions for these city-driven efforts — federal stimulus dollars from the Neighborhood Stabilization Program, rock-bottom home prices that gave the cities more buying power, and idled contractors and homebuilders eager to compete for government contracts.
In addition to rehab work, the three cities used some of the money to lure buyers back into the market with home buyer assistance programs.
Minnesota, at $107 million overall in neighborhood stabilization money, received far less than states like Arizona, Nevada and Florida. All the same, the money came just in time.
“It really allowed communities in Minnesota to react quickly in the early days of the foreclosure crisis when neighborhoods were being devastated,” said state Housing Commissioner Mary Tingerthal. “Knowing they could make a commitment to buy a house or lot really staved the negative downward spiral.”
The overall federal stimulus effort was controversial, regardless of how the money was used, and Brooklyn Park Mayor Jeff Lunde acknowledged that the idea of the city paying for private-home rehabs might make some blanch. But he said the severity of the crisis called for creative solutions. Looking at abandoned homes with dingy kitchens and dated floor plans, he and others feared that the private market wasn’t going to be the answer.
Brooklyn Park ranked highest in foreclosures among Hennepin County suburbs in 2008 and 2009. Many of the 1970s-era split levels and two-story houses would cost more to fix up than they’d be worth. The number of rundown single-family rentals started to surge, threatening to drag down property values even further in some neighborhoods. The city aggressively pursued the federal funding.
“It was a needed bridge in a time of trouble as the market healed,” Lunde said.
Speaking generally, Phil Krinkie, former head of the Taxpayers League of Minnesota and a former legislator, sounded a different note. Krinkie said that “federal money coming into a community to buy up property changes the local marketplace. Usually, it helps a very select few, while it pushes up the cost of housing for others.”
Still, he said it’s difficult for city council members to turn down federal money.
A city-by-city look
Minneapolis had $32 million in stimulus money to spend on housing redevelopment. Before that, “we had less than $1 million a year,” said Elfric Porte II, the city’s manager of residential and real estate development.
Minneapolis bought, renovated and resold 188 homes and 167 rental units, mostly in north and northeast Minneapolis, and worked with seven nonprofit developers to complete the work.
The city has purchased an additional 231 properties for redevelopment and used federal money to demolish 260 condemned properties.
“There is still a lot of work that needs to be done. Those properties need to be rebuilt,” Porte said.
In Brooklyn Park, the city has funneled most of its efforts into rehabs with a goal of stanching the rise in single-family rentals. The city is partnering with developers to buy, rehab and resell 174 foreclosed homes, adding a 30-year restriction against renting on all of the properties.