Homebuyer and home rehab help is expanded for the progeny of those displaced by I-94 project.

The city of Saint Paul’s efforts to compensate Rondo neighborhood homeowners displaced six decades ago by the construction of I-94 took several key steps forward on January 11. The Saint Paul City Council, acting as the Housing and Redevelopment Authority (HRA) Board, allocated $2 million to a city program that provides help with home down payments. Some of those funds could be used for the city’s new Inheritance Fund.

Restoring lost generational wealth

The Inheritance Fund was proposed by Mayor Melvin Carter as part of the 2023 city budget. It is meant to mitigate what is described as the lost generational wealth of direct descendants of families who were displaced when I-94 was built through the city’s largely African American Rondo neighborhood in the 1960s.

“This targeted approach to Saint Paul’s specific history allows the city to address homeownership disparities in a hyper-local way that not only replaces lost wealth but contributes to community healing,” a city staff report stated.

The city will work with the Rondo Community Land Trust to verify the residential history of people who say they are descendants of residents displaced by freeway construction.

Addressing racial disparities in homeownership

The Inheritance Fund will draw on two existing city programs—the Downpayment Assistance Program and the Homeowner Rehab Loan Program. The City Council amended the guidelines for these two programs on January 11 in hopes that more people will be able to benefit from them. Tara Beard, the city’s housing director, said the changes are intended to address the racial disparities in homeownership in the city.

The Downpayment Assistance Program, which began in 2020, has served more than 40 households earning no more than 60 percent of the area median income (AMI). To date, more than $1.5 million has been spent through the program. Those funds were drawn from the city’s Housing Trust Fund and the Minnesota Housing Finance Authority Community Homeownership Impact Fund.

Down payment assistance

Several changes were approved for the Downpayment Assistance Program. Now, households earning up to 80 percent of AMI qualify for the program. And households that qualify for the Inheritance Fund can receive the assistance even if they earn as much as 100 percent of AMI. Also, the down payment assistance used to be limited to specific neighborhoods where residents faced displacement pressures. Now eligible properties can be anywhere in Saint Paul.

 

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The down payment assistance can cover down payments, closing costs and property inspection fees. The amount of assistance varies. The typical award is $40,000, but an award can increase to $110,000 under certain conditions. First-generation homeowners can receive an additional $10,000 in assistance. Households that qualify for the Inheritance Fund can receive an additional $50,000, or an additional $60,000 if the home is being purchased in Summit-University (former Rondo neighborhood).

Loan terms were also changed for the down payment assistance—from 30 years repayable when a house is sold to 15 years with amortized loan forgiveness. The new guidelines also eliminated purchase price limits and limits on college and retirement savings.

Home rehab loans

The Homeowner Rehab Loan Program, formerly known as the Citywide Rehabilitation Program, has been in place since 2010. It provides financial assistance to low- and moderate-income homeowners to maintain and improve their homes. The program to date has served 572 households earning no more than 60 percent of AMI or no more than 80 percent AMI under certain emergency conditions. It is funded through the city’s share of federal Community Development Block Grants.

Eligibility for the Homeowner Rehab Loan Program was broadened by the HRA from households earning up to 60 percent of AMI to households earning up to 80 percent of AMI.

The maximum rehab loan was previously $25,000, or $50,000 under certain “emergency” conditions. Regular program loans are now limited to $40,000, with the ability to add another $40,000 under emergency conditions. Homeowners who qualify for the Inheritance Fund can receive an additional $15,000, or an additional $40,000 if their home is in the Summit-University neighborhood. This  increases the maximum available under the Inheritance Fund to $120,000.

The terms of the loans were reduced from 30 to 15 years, and life insurance policy redemption value was removed from the household asset limit.

— Jane McClure

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