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costs of municipal services. Cities' revenue <br />also continue to decline due to delinquent <br />utility payments and property tax payments, <br />as well as added costs for nuisance <br />abatements. Although the number of those <br />mortgage foreclosures has stabilized <br />somewhat since the peak of the recession in <br />2008, issues surrounding community <br />recovery are still ongoing. <br />State and local governments can play an <br />important role in spurring reinvestment in <br />struggling neighborhoods, but without <br />additional resources to address the variety <br />and costly impacts of foreclosures and <br />vacant properties, cities cannot maintain or <br />increase those activities to meet local needs. <br />The federal government has provided funds <br />for neighborhood stabilization, but such <br />funds are limited in eligible uses and scope, <br />and they are only available to a limited <br />number of cities. <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 />73 <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) Secure increased state and federal <br />resources and provide financing tools <br />to help cover city costs associated with <br />foreclosed and /or vacant properties, <br />community revitalization strategies, <br />and community investment, including <br />revenue sources for programs that <br />support foreclosure mitigation, <br />homeownership counseling, and <br />expanded homeownership <br />opportunities and are sustainable. <br />b) Allow cities to take actions necessary <br />to protect foreclosed and/or vacant <br />homes from damage and to help <br />preserve property values in <br />neighborhoods where concentrations <br />of such conditions are present, <br />