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unaddressed, these properties destabilize <br />neighborhoods, depressing neighborhood <br />property values, and driving up costs of <br />municipal services. <br />Cities continue to strive to preserve the <br />viability and safety of their communities. <br />However, without additional resources to <br />address the variety and increasingly costly <br />impacts of foreclosures, cities cannot <br />maintain or enlarge those activities to meet <br />local needs. The federal government has <br />provided funds for neighborhood <br />stabilization, but such funds are limited in <br />eligible uses and scope and they are only <br />available to a limited number of cities. State <br />funding for Minnesota Housing programs <br />has not kept pace with the urgency of <br />addressing community recovery. <br />Contracts for deed have been used to <br />successfully buy and sell thousands of <br />homes around Minnesota. However, some <br />property owners use contracts for deed as an <br />alternative to a traditional lease, even though <br />the purchaser has no intention of buying the <br />home. Some communities have encountered <br />a situation where a property owner is buying <br />many homes in a community, then selling <br />them on contract for deed. This can allow a <br />person to essentially act as a landlord while <br />evading a city's rental inspection and rental <br />licensing process, while the buyers lose the <br />traditional legal rights and protections as <br />tenants. Many view it as a way to rent the <br />property and may not be aware of it being a <br />contract for deed. <br />Numerous problems arise for cities and <br />neighborhoods when property owners are <br />acting essentially as renters. It is difficult to <br />determine who is responsible for <br />maintaining the property or for paying utility <br />bills and property taxes, and cities may not <br />be able to inspect substandard properties if <br />they are not subject to a lease agreement. In <br />some situations, property owners may wish <br />to have a renter be the responsible party for <br />utility bills and utilize contract for deed <br />arrangements to have the person living on <br />the property be the responsible party. The <br />property may also not be recorded at the <br />county for homesteading purposes if the <br />buyer is not aware of the formal change in <br />ownership that results from a contract for <br />deed. <br />In recent years, private equity companies <br />have begun purchasing large numbers of <br />single-family homes to convert to residential <br />rental uses. The impacts of large a number <br />of acquisitions by private equity companies <br />on cities, housing stock, and the rental and <br />home ownership market are not yet fully <br />understood by local, state, and federal units <br />of government. Possible issues that may <br />need further exploration include proposed <br />disposition strategies for such a large <br />number of properties and how that may <br />affect the local housing market. <br />Response: The Legislature should: <br />a) Support Minnesota Housing in its <br />efforts to strengthen communities <br />where foreclosures and current rates <br />of delinquencies are still high (as <br />much as 5 percent statewide as <br />compared with the normal rate of 1-2 <br />percent). <br />b) Secure increased state and federal <br />resources and provide financing tools <br />to help cover city costs associated with <br />foreclosures and community recovery, <br />including revenue sources for <br />programs that support foreclosure <br />mitigation and homeownership <br />counseling. <br />c) Consider establishing a non- <br />competitive program to provide a <br />match for city -subsidized affordable <br />housing projects. <br />d) Allow cities to take actions necessary <br />to protect foreclosed and abandoned <br />League of Minnesota Cities <br />2015 City Policies Page 50 <br />