Racial Equity Impact Analysis (REIA)

The Racial Equity Impact Analysis helps the City consider racial equity outcomes when shaping policies, practices, programs and budgets.

Homeownership Opportunity Minneapolis program changes - REIA

Section 1: Background
Public Safety No
Housing Yes
Economic Development No
Public Services No
Environmental Justice No
Built Environment & Transportation No
Public Health No
Arts & Culture No
Workforce No
Spending No
Data Yes
Community Engagement No
The proposed changes to the Minneapolis Homes Access program (previously Homeownership Opportunity Minneapolis) will result in a stronger ability to leverage the City's down payment assistance program with regional programs. The intended changes strengthen access to homeownership opportunity city-wide. Performance measures will track outcome disaggregated by race, to inform future program adjustments.
Roxanne Young Kimball, Ryan Nestingen
Section 2: Data
The Minneapolis Homes Access program is designed to provide down payment assistance and access to homeownership throughout the City of Minneapolis. A majority of homes that are affordable to homebuyers below 80% AMI are concentrated in the Camden, Near North, and Phillips communities, due to the continuing effects of the Great Recession, redlining, and racially restrictive covenants that impacted home values within these communities. Through regional advocacy efforts there are several additional down payment assistance programs that will be avialable in 2024, the City is seeking to align its program with regional efforts in order to open up opportunity city-wide.

In recent times, housing costs have risen relative to incomes for renters in Minneapolis but not for owners. White non-Hispanic residents are the only racial group in the city for which a majority own their own homes, all others are majority renter. Additionally, median white household income has remained significantly higher compared to that of households of color over time. Consequently, the burden of rising housing costs falls directly and disproportionately on BIPOC and immigrant communities in Minneapolis. This pressure of housing costs is just one example of many deep-rooted disparities in wealth, opportunity, housing, safety, and health. These disparities are some of the starkest in the nation, and they manifest in consistent geographic patterns because of racially discriminatory housing practice and policy. In the 20th century, redlining brought about divestment in BIPOC and immigrant communities that featured higher densities and a mix of land uses while guiding investment towards farther out white areas with little variety of housing types. At the same time, racial covenants and other formal and informal barriers to relocation prevented BIPOC and immigrant communities from seeking opportunity elsewhere.

Homeownership has given generations of Minneapolitans the opportunity for housing stability and wealth development. However, these opportunities have not historically been available to all city residents. The combination of past racially restrictive housing policies and current lending practices have significantly reduced homeownership opportunities for people of color, in particular African Americans, Hispanics, Asian-Americans, and Indigenous people. The proposed changes to Minneapolis Homes Access are important in that they directly respond to this legacy of discrimination and seek to expand homeownership for those otherwise unfairly excluded from it, particularly BIPOC and immigrant communities who bear the brunt of the housing crisis in Minneapolis. 
In terms of describing housing outcomes for Minneapolis residents along the lines of race generally, the nature of available data on race, income, cost burden, and housing tenure is complicated such that the relationship of these items for Minneapolis residents cannot generally be summarized by one simple sentence or table. The challenge here is not gaining access to additional data but telling a clear and concise story about housing outcomes for BIPOC communities given these constraints. Contextualizing outcomes for homeownership specifically within housing outcomes generally is an important piece of that storytelling. Staff have made significant improvements in the communication of this information over time and will continue to seek ways to improve messaging on this important topic. The significance of these outcomes could also be better understood when related to existing barriers to housing but these barriers can be challenging to quantify specifically, especially for a particular group of people. Credit scores, rental histories, the need for unconventional loans, and other unidentified barriers undoubtedly limit BIPOC and immigrant communities’ access to home ownership disproportionately, but limited data prevent program design from addressing them in targeted ways. Staff intend to build on relationships with mortgage providers, realtors, and homebuyer educators over time to gain additional insight into these barriers and to leverage change within the homebuyer industry to eliminate racial disparities in ownership.
Section 3: Community Engagement
Inform No
Consult Yes
Involve No
Collaborate Yes
Empower No
Changes to Minneapolis Homes Access are through a collaborative process with other down payment assistance providers and administrators. Through the working group, government funders and administrators came together to discuss their experiences and the experience of residents served and clarify common barriers. Additional outreach was led by the Minnesota Homeownership Center to specifically engage renters of color in a series of human centered design sessions to finalize the best practice recommendations. The City of Minneapolis additionally consulted with City of Minneapolis residents by posting the guideline revisions and requesting public comment for any remaining changes. Common themes learned through the engagement process were: 1) the importance of standardizing underwriting requirements across layered government programs 2) a need to provide deeper support and assistance for homebuyers below 60% AMI 3) the importance of fund reservation, which permits homebuyers to have a 90 day window that can be renewed in order to actively look for homes in a very competitive housing market.
Section 4: Analysis
The Minneapolis Homes Access program has had a strong rate of service to BIPOC households of over 70% for eight years. Considering the new, substantive investments in down payment assistance available through the county and state, there is an exciting opportunity to both expand the reach of Minneapolis program throughout the entire City and to reach lower AMI households. 

Continued community engagement around Minneapolis Homes programs has raised a concern about the threat of displacement of Black, Indigenous, People of Color , and Immigrant (BIPOCI) residents from the city and also concern about broadening access to City of Minneapolis programs to diversify who does business with and who benefits from City’s programs like down payment assistance, property development and homeowner support opportunities.

The real estate market has changed since the start of the HOM program in 2016. When the program started, the mortgage rate was 4.3%, with the median home price being $230,000. In the seven years since the program started, mortgage rates have increased to 7.3%, with the median housing price increasing to $315,000.

The City is part of a consortium that is seeking to encourage a more uniform adoption of down payment assistance best practices in the state, including the Minnesota Homeownership Center, NeighborWorks Home Partners, Hennepin County, Ramsey County, Minnesota Housing, Three Rivers Community Action, and the City of Saint Paul. These best practices focus on increasing investment in down payment resources, improving the targeting of down payment resources, reducing the barriers to accessing down payment resources, and facilitating standardization and transparency for the use of down payment resources.

This update to the city’s down payment assistance program is in response to both the changing real estate market seeing increased rates and home prices and being involved with the consortium The changes are intended to make the city’s down payment assistance program which will be called  Minneapolis Homes: Access down payment assistance program, more targeted, particularly towards improving outcomes of racial equity and expanding access to affordable housing in Minneapolis
Section 5: Evaluation
The City has established performance measures that track race, ethnicity, household size, and income. Staff analyze performance measures to make program adjustments and strive to structure the DPA program to be culturally responsive and inclusive to the needs of Minneapolis residents. Success indicators are a continued rate of service to BIPOC households exceeding 70%, an inclusivity of all races/ethnicities that are experiencing disparities in homeownership rates, and the availability of homes to purchase city-wide.
The City has created a new dashboard using Salesforce data that provides a quarterly update on program progress. The new dashboard is available on the City website and can be consulted to observe program impacts.
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