Mayor Frey finalizes proposal for first Round of American Rescue Plan funding

June 4, 2021

Today, Minneapolis Mayor Jacob Frey outlined his proposal for spending the first of two rounds of the $271 million in federal funding awarded to the City of Minneapolis through the passage of the American Rescue Plan funding. Frey and City staff moved swiftly to analyze Treasury guidance and develop and vet an initial round of spending that meets the City’s most urgent needs. The move makes Minneapolis among the first major cities to finalize a plan for deploying the crucial federal funds, which under the legislation, must be allocated by 2024. 

The $89 million proposal features a strong emphasis on economic recovery, affordable housing, and community safety measures while piloting new programming like a Guaranteed Basic Income (GBI) Pilot and an apprentice-style community safety initiative.  

Key priority areas include affordable housing ($28 million), economic recovery ($37 million), public safety ($11.5 million), and a new Minneapolis GBI program ($3 million). Approximately $12 million is budgeted for enterprise investments such as furlough relief and other staff needs.  

“This significant funding is meant to jumpstart our city, provide much needed relief to residents that are struggling, and reignite our communities and local businesses,” said Frey. “These new funds are a vital resource to tackle some of the most critical issues from safety to housing, and must be deployed quickly and strategically to ensure the biggest impact.”

The Minneapolis City Council is scheduled to vote on the budget July 2. Frey will put forward his proposal for allocating the remaining $180 million later this year. The mayor’s full proposal is available here and several key programs are highlighted below.  

Affordable Housing 

Priorities include home ownership, keeping people in their homes and providing access to new home ownership options; affordable housing production and increasing inventory; creating opportunities for people experiencing homelessness; and expanding public housing in our city.  

  • Housing Stability for Low Income Renters and Homeowners($7,075,000) 
  • Affordable Homeownership Preservation Grant ($200k)
  • Assistance to Homeowners at risk of foreclosure ($1.5 M)
  • Heritage Park ($375k)
  • Housing Stabilization – Land Trust ($1 M)
  • NOAH Preservation Fund ($2 M)
  • Home repairs ($2 M)

The City proposes providing deeper investment in the affordability gap for homeowners at risk of displacement due to unsustainable mortgage payments or significant deferred home repair needs. Investments will also go to physical safety improvements at properties, and acquisition and preservation of 100-200 Naturally Occurring Affordable Housing units.  

  • Homelessness Response($6,000,000) 
  • Encampment response ($1 M)
  • Homeless response flexible fund ($500k)
  • Supportive housing for persons experiencing homelessness ($2.5 M)
  • Women’s Shelter ($2 M)

The City has seen an increase in encampments of unhoused communities and more innovative, low barrier solutions are needed to create pathways out of homelessness and into housing. Investments include acquisition and rehab of housing for people transitioning out of homelessness; PPE, hygiene stations, personal storage opportunities, and health outreach to encampments; a new, 30-bed emergency homeless shelter for people who identify as women; and a “flexible fund” for creating a range of pathways out of unsheltered homelessness into permanent housing solutions.  

  • Reduce Racial Disparities in Homeownership ($4,450,000)
  • Expand homeownership in Harrison ($550k)
  • Expand homeownership for low income households ($1 M)
  • 1st Mortgage Equity Fund ($500k)
  • Minneapolis Homes ($2.4 M) 

The City will work to reduce racial disparities in homeownership by allocating funding to a variety of strategies including an equity pool to contribute to manual underwriting of first mortgage products and reduce barriers to homeownership. Investments would also fund the Minneapolis Homes: Financing program – addressing the affordability and development gap – to increase the number of perpetually affordable homes across the city.  

  • New Low Barrier Housing($6,200,000) 
  • MPHA Scattered Site($4,600,000) 

If more deeply affordable rental options were available, more people experiencing homelessness and being served by shelters could afford a rented home. Single Room Occupancy (SRO) units have historically been a cost-effective part of the housing continuum serving extremely low-income individuals. This new pilot program will fund acquisition, rehabilitation, or adaptive re-use, and/or operating reserves for SRO-type properties in partnership with Hennepin County. This funding level will support acquisition/development of up to approximately 75 SRO dwelling units. 

The City also needs new housing models, including new shared housing and intentional communities. In partnership with Street Voices of Change, Envision Community would be intentional community designed and led by residents with lived experience of homelessness. 

Minneapolis Public Housing Authority (MPHA) has a portfolio of scattered site public housing single family rental homes that need significant repair/replacement. This funding will provide gap financing for MPHA's proposal to assemble approximately 16 scattered sites and replace current structures with modularly constructed higher density (four-unit and six-unit buildings), all 2 and 3 bedroom unit properties, for a total of 84 deeply affordable units. 

Economic Recovery and Inclusion 

Priorities include small business support, job training and placement, and cultural district investments.  

  • Minneapolis Recovery Fund ($17,700,000)
  • Commercial Property Development Fund ($10,000,000)

Pandemic prevention measures devastated small businesses due to mandatory closures, capacity restrictions, and other measures to slow the spread of the virus creating financial holes and increasing the time for full recovery to a pre-pandemic state. Historically during recovery periods, BIPOC entrepreneurs, especially Black-owned businesses, lag white entrepreneurs having more difficulty obtaining capital to rebound. This fund provides flexible support for small businesses through three approaches:

    • License fee reimbursement for fees owed to the city from March through December of 2021
    • Fee reductions for businesses forced to close due to economic hardship from the pandemic and are seeking to reopen
    • Support for businesses who have been historically left out of government aid programs

Pandemic prevention measures devastated small businesses due to mandatory closures, capacity restrictions, and other health measures, but businesses owned by Black, Indigenous, Asian or Pacific Islanders, Latinx, immigrants, and other people of color (BIPOC) have been less likely to be eligible for and to receive relief funds throughout the crisis. This additional funding for CPDF would support the 1700 businesses forced to close due to stay-at-home orders; reduce short-term overhead expenses; supports employment in small businesses; and accelerate small business and real estate development economic activity across the city.  

  • Minnesota Works ($660,000) 

In Minneapolis more than 140,000 people filed for unemployment insurance in 2020 and the overall unemployment rate exceeded the State’s. The economic shocks impacted BIPOC residents at a higher rate than their white counterparts. This multi-pronged approach centers community-based partners to support:

    • Job Creation
    • Training
    • Employment
    • Entrepreneurship
  • Workforce Development Ambassador Program ($1,000,000)
  • Cultural District Activations ($2,500,000)

The Ambassador Program will expand outreach to people looking to enter into the workforce development system and gain job skill training assistance. People with community connections will act as resource ambassadors to break down barriers to access, target areas of the City with lower workforce participation rates, and provide job opportunities for the more than 140,000 people in Minneapolis who filed for unemployment benefits in 2020. The program will also focus on training workforce for the expanding green industry. 

The City established Cultural Districts to further racial equity, prevent displacement, preserve cultural identity, and fuel economic growth through the creation and prioritized implementation of new investment tools, policies, and practices historically disadvantaged neighborhoods of Minneapolis. COVID-19 prevention measures devastated small businesses in these areas. Investment includes:

    • Community Coordination: $350,000
    • Community Events and Festivals: $175,000
    • Cultural District Service Offerings: $350,000
    • Enhanced Tech Assistance: $175,000
    • Façade Grants: $175,000
    • Internal Building Improvements: $525,000
  • Arts and Culture Workforce Support ($500,000)

Funding for small and nonprofit arts and cultural enterprises affords them the opportunity to hire, contract and train artists to assist with projects requiring creative support – from messaging their plans, to future programming presentations, and creative ways re-engage audiences and donors. The proposal creates jobs for creatives with a focus on those most impacted by the pandemic. Research shows that an accelerated creative sector and growth in arts employment will catalyze economic recovery and positively impact overall employment. 

All the above bulleted Economic Recovery and Inclusion initiatives can and will be used to promote Black-owned business, Black-owned property ownership, Black-created art, and workforce support at and around 38th and Chicago.  

Public Safety 

Priorities include a both-and approach of violence prevention, intervention, and emergency response, supported by funding community programs.  

  • Youth and Community Safety Fund ($1,750,000)

Minneapolis Health Department will develop and administer an RFP process to distribute funding to community-based partners that provide services under the broad headings of Community Safety, Youth Opportunity, Community Health and Opioids. With grants ranging in size from $50,000 - $150,000, the City can provide financial support to between 10 and 35 organizations/programs that serve our most impacted communities in Minneapolis. 

  • Violence Prevention ($2,100,000)

The number one barrier for participants in the Group Violence Intervention (GVI) program, Next Step and Minneapol-US/ Interrupters, is stabilization. Participants who are unable to access safe, independent housing, access to food, full time and employment and educational services are less likely to successfully complete the program and end the cycle of violence. The OVP Stabilization Initiative will provide significant pathways towards reductions in clients likelihood for violence perpetration and victimizations. Additionally, funding will be allocated to support a Community Safety Specialist (CSS) apprenticeship-style program for community members to help address homelessness, mental health crises, addiction, domestic abuse, and other trauma. 

  • Youth-Specific Group Violence Intervention ($200,000) 

Group Violence Intervention services designed specifically for young people ages 19 and under are intended to reduce the likelihood of involvement with gun violence. Through partnership with juvenile justice system partners, social services, and community, funding will provide support and resources for young people to take a path away from serious violence. This would be part of the Office of Violence Prevention’s comprehensive approach to preventing, intervening in, and supporting healing from violence. 

  • Community Service Officers and Civilianization ($3,175,000)

With the significant reduction in sworn FTEs combined with high recent crime trends, the Minneapolis Police Department is seeking alternative preventative policing measures to assist in investigations and support community-oriented recruitment efforts. Expanding the Community Service Officer (CSO) program will allow for additional capacity in the short-term and will provide a pipeline for future sworn officers. Additionally, CSOs will analyze footage from additional portable and fixed cameras – widely requested by communities and neighborhood organizations – to both help deter and solve crime. Cameras would be viewed in real time during periods of high crime and used to assist 911 calls. The civilianization funding will allow MPD to relieve eight sworn officers from administrative and support work to focus on law enforcement priorities.

  • Investigative and Patrol Assistance from Local Law Enforcement ($1,456,000)

In Minneapolis, gunshot wound victims have increased by 161 percent, year over year for the first 20 weeks in 2021, while response staffing has decreased. Budgetary constraints, the lengthy lead time needed for hiring and training new recruits, and recent increased crime trends have aggravated the staffing concerns. This funding will be utilized to offer outside agency investigators and officers the opportunity to work with MPD to assist in patrols, follow-up on ongoing investigations and work proactive investigations.  

  • Violent Crime Hot Spot Task Force ($250,000) 

The highest concentration of both violent crime and shots fired occur in the two precincts with the most diverse communities in the City, Precinct 3 in South Minneapolis, and Precinct 4 in North Minneapolis. By funding overtime in these “Hot Spots,” officers will be able to develop strategies to reduce overall crime and target certain violent crimes including aggravated assault, robbery, sexual assault, and homicide. 

Minneapolis Guaranteed Basic Income Pilot ($3,000,000) 

Low-income households in Minneapolis often must make difficult choices to prioritize immediate needs over long-term growth opportunities, resulting in inadequate or unstable housing and inability to complete training or educational opportunities. Existing assistance programs cover certain costs but exclude others, limiting flexibility that households need to make the best decisions for their individual situations. 

What’s more, the economic impacts of COVID-19 affected BIPOC residents at a higher rate than their white counterparts. There is a disparity between white and non-white people in educational attainment rates, wages earned, and unemployment or underemployment in Minneapolis. Addressing these disparities stabilize families and provide for opportunities to grow generational wealth. 

This pilot program would provide an income boost of up to $500 per month for 24 months to seed household financial growth and stability for approximately 200 households. To be eligible, a program participant must be a Minneapolis resident in a low-income household, and be referred through a program Referral Partner, which will be chosen based, in part, by their pre-existing wrap around service model for their participants. 

Other Supports

Remaining $12 million dedicated to community health and internal capacity needs including staffing, technology, and employee support such as city employee furlough relief.