A group effort: Investing in North Minneapolis homes

NorthMinneapolis
By Lisa Peterson-de la Cueva , TC Daily Planet
February 10, 2008

The house near 37th and Dupont is a sweet little home in the Cape Cod style, set among old pines and tidy houses. It’s just the kind of place a young couple might purchase for their first home. It has hardwood floors, an idyllic fireplace, wood molding, and delicate windows. These details are the reason the Greater Metropolitan Housing Corporation (GMHC) bid for the house at a foreclosure auction in North Minneapolis last October.

The house had fallen on rough times before GMHC bought it for $63,000. Five years ago, a family with teenage kids lived there when Joel Breeggemann moved into the house next door. “They took really great care of it and were the best neighbors,” Breeggemann said. But then
they moved out to the suburbs. “I think they wanted to move for a different school.” The family tried to sell the house, but it wouldn’t go for the price they were asking. They moved out anyway and rented the house until they started having problems collecting rent. It then went unoccupied for about two years—during which time burglars stole the copper piping in the basement.

The Greater Metropolitan Housing Corporation (GMHC) was founded in 1970 to provide “affordable housing for low and moderate income
individuals and families, and to assist communities with housing revitalization.”

One way GMHC accomplishes this is by providing capital to organizations or individuals in the pre-development stage of affordable housing projects. Often developers want to create affordable housing but lack the financial means to go ahead on a project. GMHC steps in and provides “seed” loans to developers. In addition to pre-development loans GMHC operates the Single Family Home Ownership program. Through this program, GMHC sells houses to first-time buyers and to families who make 80% or less of median family household income. Beginning in the mid 1990s, GMHC began operating their Housing Resource Centers. They now have centers in at least sixteen sites to help developers and residents navigate the affordable housing market

GMHC’s programs span the Twin Cities, but they have a special history in North Minneapolis. Carolyn Olson, Executive Director of GMHC, says that in the early 1970s, “after the riots, we were the only ones who would go in there and develop.” They have maintained a
presence there ever since.

According to their 2006 annual report “GMHC has constructed or renovated 1,351 homes with a total development cost of $132,605,893” since 1970.

When the house finally went under foreclosure, Breeggamann helped organize the neighbors on his block. He called the organizers of the foreclosure auction and asked to be a part of the open house process. During the open house he sat in the abandoned house hoping to deter buyers interested in acquiring it for use as a rental property.

That’s when Stephanie Gruver, Special Projects Coordinator at GMHC, came along. Gruver and Breeggamann had known each other through various neighborhood associations. Gruver, a resident of the Webber-Camden neighborhood in North Minneapolis, knows the history of the neighborhood well. As she drove me around the neighborhood she told stories about dozens of houses and businesses. “That house is owned by an architect who built a garden instead of a garage. He got a blue ribbon for his garden last summer,” she said. For every boarded-up house we saw, Gruver also had a story about a newly renovated home. She pointed to a two-story home and said the owner “bought it for $120,000 and the guy got a loan to help with the renovation costs. I think he put in about $70,000. Inside it’s just beautiful, you should
see the wood.”

She got a job acquiring properties with GMHC because of her familiarity with properties in the neighborhood. She was hired in September after Minnesota Housing and the Family Housing Fund loaned GMHC $11 million to buy North Minneapolis properties that had fallen under foreclosure.

Gruver came to see home on Dupont during the foreclosure open house, where she saw Breeggemann. After reviewing the house she decided GMHC should bid on it at the foreclosure auction.

GMHC has its work cut out for it: fighting the rapid rate of foreclosures is a daunting task. According to the Folwell Neighborhood Association there have been 756 foreclosures in the neighborhood in the last six months. In roughly the same amount of time, GMHC has made purchase offers on 52 houses and 33 have been accepted. By next summer they hope to have about 80 properties purchased.

Since Gruver’s branch at GMHC focuses on the acquisition and selling of real estate, it relies on their community partners to work on foreclosure prevention. The Folwell, McKinley, and Webber-Camden neighborhood associations, in partnership with GMHC, are currently blanketing North Minneapolis with postcards. They tell residents to stop by for mortgage counseling if they answer yes to any of these: “I don’t understand my mortgage. My mortgage payment will adjust soon. I am behind on my mortgage payments, or I will miss my next mortgage payment.” GMHC also relies on neighborhood associations to contact them if they know of viable properties that have fallen under foreclosure.

Gruver specializes in what she calls the “the stop hole effect.” If GMHC can buy one boarded up house, she hopes, then residents on the rest of the block will want to stay. She says, “people in the neighborhood really need to know that something is being done.”

The little house on Dupont will most likely go on the market this summer for an estimated $160,000. It will be available to first-time buyers with low to moderate income. Since GMHC is a non-profit they will probably just break even on the house and simply cover their administrative costs.

The home on Dupont is indicative of strong neighborhood organizing in North Minneapolis, mitigating the effects of foreclosures. It is also the result of a swift reaction and appropriation of public and private funds. Joel Breeggemann was worried about the fate of his neighbor’s house. “But thank God” he said, “that GMHC scooped it up at the auction. We support their program and liked that they sell [houses] at affordable rates, and we liked the owner-occupant aspect.” All that’s missing is a new owner.

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