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issue 1, 2009 ~ ®t ~' ~ ~ ~ ~ Page 5
<br />To view a gallery of foreclosure images, visit Community Dividend on the Publications tab at www.minneapolisfed.org.
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<br />paigns that market neighborhoods to spe-
<br />cific groups of potential homebuyers.
<br />"When the housing crisis started, the first
<br />thing we did was access data that could give
<br />us an accurate assessment of where the fore-
<br />closureswere and how widespread the prob-
<br />lem was;' says Tom Streitz, director of hous-
<br />ing and polity development for the City of
<br />Minneapolis Community Planning and
<br />Economic Development Department.
<br />"Once we realized the scope, we went to
<br />work with a variety of outreach programs."
<br />Examples include continuing the Don't
<br />Borrow Trouble ad campaign, which
<br />spreads the message that help is available to
<br />people in "foreclosure; using the city's 311
<br />information line to direct people to assis-
<br />tance and counseling; putting informational
<br />inserts in utility bills mailed to strategically
<br />important areas; and sponsoring housing
<br />fairs at which homeowners can talk directly
<br />to lenders.
<br />"Counseling and prevention were key in
<br />those early days;' Streitz continues. "From
<br />there, we moved toward intervention by tar-
<br />geting six cluster areas [on the north side],
<br />working with the neighbors and select non-
<br />profit and for-profit developers to purchase
<br />properties for demolition or for rehabilita-
<br />tion and resale. Working in these clusters
<br />enables us to have a strong, visible impact on
<br />a community and to hold back blight.
<br />Adding incentives for buyers-such as the
<br />Minneapolis Advantage, which has been
<br />wildly popular-has also had a positive
<br />impact in these distressed communities:'
<br />Collaborative efforts
<br />are under way
<br />As the examples from the City of
<br />Minneapolis demonstrate, work is being
<br />done to combat foreclosures in some
<br />neighborhoods. However, the scope of the
<br />foreclosure crisis in Minnesota demands a
<br />widespread response from all sectors,
<br />including banks, mortgage lenders and ser-
<br />vicers, real estate agents, government agen-
<br />cies, nonprofits and CDCs, elected officials,
<br />private developers, and community leaders
<br />and residents. Recognizing the need for this
<br />collaborative, comprehensive approach,
<br />key institutions came together in late 2006
<br />and formed the Minnesota Foreclosure
<br />Partners Council (MFPC). The .goal of the
<br />MFPC is to identify, fund, and implement
<br />coordinated policies and .programs that
<br />effectively address the impact that the
<br />recent surge in mortgage foreclosures has
<br />For nearly 30 years, Local Initiatives Support Corporation (LISC) has provided
<br />resources to strengthen and sustain neighborhoods across the country.
<br />Historically, LISC has concentrated on providing capital investment for real estate
<br />development in low-income communities. Recently, in light of the devastation
<br />wrought by foreclosures, LISC has identified a need to connect neighborhood
<br />recovery to broader efforts.
<br />In LISC's view, community developers and neighborhood organizations are
<br />uniquely positioned to broker relationships across sectors such as housing, educa-
<br />tion, safety, health, jobs, the arts, and more, to help advance a holistic approach to
<br />healthier communities. To encourage community development corporations
<br />(CDCs) to embrace a broader agenda, LISC has launched an initiative called
<br />Building Sustainable Communities.
<br />found themselves homeless or without
<br />quality housing alternatives. According to a
<br />national survey conducted by the National
<br />Coalition for the Homeless, nearly 61 per-
<br />cent of local and state coalitions for the
<br />homeless have seen an increase in homeless-
<br />ness since the foreclosure crisis began.4
<br />A threefold strategy
<br />As the incidence of vacant properties has
<br />increased, nonprofit neighborhood organi-
<br />zations and community development cor-
<br />porations (CDCs) have become key players ;
<br />in addressing the negative effects of neigh- '.
<br />borhood blight. To date, their strategy has
<br />been threefold. First, community organize-
<br />tions have identified the owners of individ-
<br />ual properties that are in close proximity to ',
<br />current or proposed developments of ':
<br />housing, commercial, or community facili-
<br />-ties in the neighborhood, usually in areas
<br />where CDCs and others have made consid- '~
<br />erable investments already. Second, CDCs I!
<br />and other neighborhood-based organiza-
<br />tions have stepped up communication and
<br />coordination with city code-enforcement
<br />agencies to try to make sure that the owners '.
<br />keep their properties properly secured and
<br />maintained. Third, these same groups have
<br />increased marketing efforts to attract
<br />prospective buyers. They promote neigh-
<br />borhood amenities and the fact that housing
<br />is now more affordable than in recent years.
<br />In addition, several CDCs, local lenders,
<br />and public institutions have begun to
<br />develop financing products to hem
<br />prospective~yers purchase pr~r-
<br />ties in certain neighborhoods. For example,
<br />the Minneapolis Advantage program is one ',
<br />early effort on the part of the City of
<br />Minneapolis to address the concentration !,
<br />of foreclosures and vacant properties. The
<br />program provides down payment and clos- i
<br />ing cost assistance to first-time ho___ _mebuy` '
<br />ers who purc ase a ome in the McKinley,
<br />Folwell, or Webber-Camden neighbor- ',
<br />hoods in North Minneapo is. The home-
<br />buyer receives a $10,000, zero percent
<br />interest loan that is forgivable if he or she
<br />lives in the house for five years or longer.
<br />The city has also used other creative tools
<br />to address the problem of foreclosed,
<br />vacant properties, including aggressive
<br />acquisition; enhanced regulatory tools,
<br />such as aggressive inspections enforcement
<br />and increased vacant-property fees; legal
<br />strategies, including lawsuits that force
<br />lenders and servicers to the table to negoti-
<br />ate workouts with borrowers; and cam-
<br />The initiative weaves together five basic goals:
<br />• Investing in the physical environment;
<br />• Increasing family income and wealth;
<br />• Stimulating economic activity locally and regionally;
<br />• Improving access to quality education; and
<br />• Fostering livable, safe, and healthy environments.
<br />Building Sustainable Communities will form the basis of much of LISC's work
<br />over the next three years. The approach involves integrating the work being done
<br />on the issues community residents have identified as being important to improving
<br />their quality of life. It also elevates the, importance of engaging with the commu-
<br />nity throughout the development process-from issue identification to planning
<br />to implementation. Finally, it involves a sense of mutual accountability among
<br />residents and community organizations. CDCs remain absolutely central to this
<br />approach but, in order for more comprehensive strategies to be employed, other
<br />implementation partners need to be engaged as well.
<br />Duluth, Minn., offers an example of LISC's Building Sustainable Communities
<br />initiative in action. In Duluth's Hillside neighborhood, a new mixed-income
<br />development is emerging on the site of what was once a troubled, 200-unit,
<br />barracks-style public housing project. The development, known as Harbor View
<br />Hillside Revitalization, is a partnership between the City of Duluth Housing and
<br />Redevelopment Authority and The Communities Group, working in cooperation
<br />with Duluth LISC. The revitalization will include new housing, a village center,
<br />and amixed-use commercial and residential complex featuring a grocery store.
<br />The neighborhood's existing Copeland Community Center will expand to include
<br />child care, early learning, after school programs, and a technology training center.
<br />There will be new parks, an outdoor softball field and skating rink, and an indoor
<br />sports facility. .
<br />Building Sustainable Communities is under way in the Twin Cities as well.
<br />Twin Cities LISC is playing an important role in a multimillion-dollar neighbor-
<br />hood investment project called Invest Saint Paul. The collaborative project, which
<br />is led by the City of St. Paul, will coordinate and focus private and public
<br />resources on four St. Paul neighborhoods suffering from disinvestment and fore-
<br />closures: Dayton's Bluff, East Side, Frogtown, and North End. Twin Cities LISC is
<br />helping coordinate funding efforts, community input, and outreach in two Invest
<br />Saint Paul target areas and two additional target areas in Minneapolis. A suburban
<br />target area is also emerging.
<br />For more information on LISC, visit www.lisc.org. To learn more about efforts
<br />in Duluth and the Twin Cities, click on the Local Offices tab.
<br />Continued on page 7
<br />Visit us at www.minneapolisfed.org
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