2019.10.08 WS Packet - Laserfiche WebLink

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2 EXECUTIVE SUMMARY As cities and counties in the Twin Cities Region look for ways to effectively further fair housing, these jurisdictions are increasingly focusing on involuntary displacement of tenants as a fair housing issue where they can play a constructive role. In fact, there are a number of useful actions local jurisdictions can take, to minimize or prevent displacement into an increasingly unforgiving rental market. In some cases, this means governments reviewing and updating long recognized policy tools while in other cases newly emerging strategies are called for. The largest current displacement threat facing Twin Cities Region lower income renters is the rapid erosion in affordability of naturally occurring affordable housing (NOAH), due to the sale and conversion/upscaling of these buildings, or simply the large and widespread rent increases occurring across the region. But vulnerable residents face other threats as well, from expiring use restrictions to redevelopment/demolition of housing to slumlord practices which exploit tenants. This report is an attempt to catalogue the range of policies or strategies local governments can adopt to minimize harm and stabilize families. We include initiatives enacted or being considered locally as well as state or local legislation adopted elsewhere around the country. This report also acknowledges that market conditions and displacement threats vary widely across the region, and that FHIC jurisdictions include both cities and counties, which have different authorities and programs touching on these issues. Acquiring NOAH to preserve affordability. The first topic addressed is how local governments can facilitate the acquisition of NOAH properties by mission driven preservation providers. The most aggressive approach is to create on behalf of residents or the city a Right of First Refusal (ROFR) in which the residents or city have the opportunity to match a potential purchase price which has already been negotiated. This provides the preservation buyer maximum leverage but it often triggers resistance from parties who have already negotiated a sale. An Opportunity to Purchase (OTP) is another approach, in which owners are typically obligated to negotiate in good faith with a preservation purchaser. Finally, farther down the scale, a city can simply require an advance notice of the owner’s desire to sell his property, so preservation purchasers at least have the opportunity to get to the table in any sales discussions. There are pros and cons to all three approaches. Also in this section several other ideas to encourage more of these sales to preservation buyers are discussed. Incentives for NOAH owners to retain affordability. A second topic, also related to NOAH preservation, is how to create incentives for owners to keep their NOAH properties affordable, rather than maximizing rents available in the market or even repositioning the buildings to a higher income market segment. The most promising strategy here is cities or counties making expanded use of the Low Income Rental Classification (LIRC) program, popularly known as “4d,” by offering property tax breaks to owners willing to agree to rent and income restrictions. Minneapolis recently rolled out a pilot program to do just this, and other cities are interested as well.