02-13-1985 Council Agenda - Laserfiche WebLink

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MINNESOTA HOUSING FINANCE AGENCY February, 1985 - - SUMMARY OF HUD RENTAL REHABILITATION PROGRAM Program Funding For fiscal year 1985 the Department of Housing and Urban Development (HUD) allocated $1,796,000 to the State of Minnesota for the operation of the Rental Rehabilitation Program. The following five communities received funds directly: Duluth, Minneapolis, St. Paul, Hennepin County, and Dakota County. The remainder of funds ($696,000) was allocated to the Minnesota Housing Finance Agency. The HUD regulations allow the Agency to work with communities that are not either within Farmers Home jurisdiction or are not direct entitlement communities for the purpose of administering the program. Eighty -eight communities in the State are in a position to receive a portion of the Agency's funding allocation. The majority of these communities are in the 7- County Metropolitan Area; _13... communities are out - state. Program Theory The basic theory of operation of the new Rental Rehabilitation Program is as follows: - Minnesota Housing Finance Agency receives two allocations of funds. One fund is used to provide subsidies to rental property owners for the physical rehabili- tation of rental property. The second funding source is an allocation of housing vouchers that are used to provide rental payment subsidies to tenants residing in the rehabilitated properties. - The subsidy provided to the rental property owner for the physical rehabilita- tion of the property is in the form of a grant. Property owners must match the grant dollar for dollar with their own source of funds. Financial feasibility of building is evaluated to determine that 1) the building has a positive cash flow after rehab, 2) rents will be maintained at affordable levels after rehab without rent controls, and 3) rents are at rent market levels (as opposed to HUD Fair Market Rents). - Subsidies to the tenants are designed to eliminate displacement that may occur because after -rehab rents are higher than pre -rehab rents; however, tenants are under no obligation to stay in the rehabilitated building. Tenants may move and take their rent subsidies with them. - Given the flexibility that tenants have with regard to where they may live with the tenant subsidy, buildings must be selected based on the financial feasibility of the building given market rents, the building's rents, area vacancy rates, and the cash flow for the building. 333 Sibley Street. Suite 200, St. Paul, Minnesota 55101 (612) 226 -7633 Equal Opportunity Housing and Equal Opportunity Employment