St. Paul to offer up to $110,000 in down payment assistance to Rondo descendants
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Up to $110,000 in down payment assistance will soon be available to St. Paul home buyers whose relatives lost homes in the Rondo neighborhood due to the construction of I-94.
The big picture: The initiative, dubbed The Inheritance Fund, is one piece of a broader push to address housing affordability and racial inequity in Minnesota's second-largest city.
Why it matters: Supporters hope it will help close racial homeowner and wealth gaps, especially for families displaced from the predominantly Black neighborhood in the 1950s and 60s.
- Communities such as Evanston, Ill., — and at least one bank — have launched similar efforts aimed at increasing home ownership among people of color.
Driving the news: The St. Paul Housing and Redevelopment Authority officially approved a $2 million transfer of city funds into the recently expanded down-payment program last week.
- Aid ranges from $40,000 for low-income buyers to $110,000 for some Rondo descendants. The loans don’t have to be repaid as long as the owner keeps the home for 15 years.
How it works: Prospective St. Paul buyers who make 80% of the annual median income or less — about $62,000 for an individual or $90,000 for a family of four — and meet other financial requirements can apply for $40,000 forgivable loans to put towards a down payment.
- First-time buyers in that group whose parents either didn't own a home or lost one to foreclosure could get up to $50,000.
- Rondo descendants can get up to $100,000 for a purchase anywhere in the city. An extra $10,000 is available for those who buy within the neighborhood.
- The income cap for Rondo-specific funding is 100% of the annual median income — about $83,000 for an individual.
- Separate grants are available to those looking to rehab existing homes.
Of note: Because the program is first come, first served, Rondo descendants won't be prioritized over other applicants.
Zoom in: Those applying for the top tier of the St. Paul program will need to sign affidavits and provide the names and former addresses of their displaced family members to support their claim.
- The city plans to use research from the Rondo Community Land Trust, as well as Census archives, Sanborn maps, old city permit data and even old phone directories that list whether someone was an owner or a renter, St. Paul housing director Tara Beard told Axios.
The catch: Even with the infusion of cash, the total funding available — $2.6 million — means just a few dozen families will get aid from this round.
- An earlier phase of about $2 million funded down payments for 42 low-income families between 2020 and 2023. The city received just under 130 intake forms from people interested in the program during that time.
Plus: Down payment help doesn't guarantee someone can find a house they can afford and actually buy, given today's market. That's especially true in a neighborhood as small as Rondo.
- Those selected must make an offer within six months, and find a house to buy within a year, before they forfeit their grant and go back to the end of the line.
The intrigue: While down payment assistance programs can help people overcome one "significant obstacle" to owning a home, it's not yet clear whether they meet the stated goal of ensuring long-term wealth generation, Edward Goetz, a University of Minnesota professor who focused on issues of race and poverty in housing, told Axios.
- He said the issue is there isn't enough research into that question, given how new many programs are.
- The requirement that the loan is partially repaid if a recipient sells before 15 years could also hinder those goals long term.
What's next: Preliminary applications are open, while final eligibility forms for those applying for the Rondo tier are expected to come online in the coming weeks.