What is the Tupelo All America Neighborhood Reinvestment Plan?
What is the Tupelo Neighborhood Reinvestment Plan?
The Tupelo Plan is a four-part, strategic approach to improve neighborhoods, and to retain and recruit families with children to Tupelo. The Plan generates a number of short term and long term growth benefits for Tupelo residents with no tax increase. What does the Tupelo Plan propose?The Tupelo Plan has four connected strategies:
1. Establish a Fast Track Home Loan Program.2. Improve housing choices in Tupelo. 3. Establish municipal rental standards to protect renters and property owners 4. Establish the Tupelo Promise to retain and attract families with children.
Why are four strategies necessary? Each strategy helps to specifically achieve goals to reverse the negative growth trends Tupelo has experienced over the past decade. Those goals include generating new residential growth, improving existing neighborhoods, enhancing public school performance, and improving public safety. The strategies of the Tupelo Plan are necessary to achieve these goals in order to retain and recruit families.
Can the four strategies be implemented in parts?
No. The Plan loses its effectiveness if all four strategies are not implemented together.
Why implement the Tupelo Plan now?
In the past decade the City of Tupelo has experienced an out-migration of families and a decline in owner occupied homes in our neighborhoods. As a result, older neighborhoods have experienced depreciation and an increase in rental homes. At the same time, the departure of middle-income families has caused an unhealthy socioeconomic shift in our public school system. Tupelo has been impacted by a shift of new residential growth into outlying communities with available development capacity and newer homes. Tupelo is experiencing the negative impacts of these changes; the community must take positive action quickly to reverse these negative trends. Tupelo must improve its competitive community advantage to maintain its success, promote neighborhood reinvestment, and family recruitment.
Who can take advantage of the Tupelo Plan?
The Tupelo Plan is specifically designed to provide equal opportunities to all Tupelo families and students. Typically, federally subsidized programs for housing and college tuition are not accessible by middle income families. None of the strategies in the Tupelo Neighborhood Reinvestment Plan have family income limitations.
How much does the Tupelo Plan cost and how can the City afford it without a tax increase?
The city’s cost is $15,750,000. According to the Tupelo Finance Department, the city would issue urban renewal bonds for a portion of this cost with remaining costs covered by the new revenue from other strategies in the plan. The bonds would be paid back through loan repayments, rental license fees, and existing city operating revenue.
How does the plan create private investment?
The City’s home loan program of $10,000,000 is required to be matched by a minimum of $40,000,000 of private investment. The City’s home grant program of $1,000,000 is required to be matched by a minimum of $2,000,000 of private investment. The Tupelo Promise provides tuition, or one-third of the overall cost to attend college. The private sector must pay the remaining two-thirds, which includes books, room and board, and expenses.
How do we know this is the right plan?
While there are always improvements that could be made to a plan like this, we know that the current strategies help to achieve necessary goals to attract and retain families. The strategies of the Tupelo Plan have been developed, criticized, re-structured, and verified by the 40+ committed Tupelo leaders who have dedicated their time to this effort.
Why is the Community Development Foundation involved?
The Community Development Foundation was asked by the Mayor and City Council President to develop and refine the All America Plan so as to get broad research and input from citizen committees. This is consistent with the many other community projects CDF has worked on during its successful history i.e. The Rural Community Development Councils in the 1950’s, the Lee County Council of Governments in the 1960’s, the State Highway Program of 1987, Lee County Fire Districts, the Lee County 911 System, the Regional Water District of Tupelo/Lee County, Several Industrial Parks and most recently the Wellspring Project. Keeping to one of its founding tenants, CDF recognizes that “Community Development precedes Economic Development”.
How have other cities responded to similar negative growth trends?
Many Mississippi cities have been unable to reverse these negative growth trends. However, in researching cities across the U.S. who have been successful at retaining and attracting families, the citizen led committees have found creative programs that worked. Several, but not all, of the recommendations in the Tupelo Plan have been crafted from parts of programs from cities with similar problems.
What if we don’t pass the Tupelo Plan? Will it really be all that bad?
The City of Tupelo has begun a community-maturing trend as growth in the city has leveled off and property tax revenues along with sales tax revenues are in decline. With fewer residents to pay taxes and a decline in property values, the city will become disadvantaged and the core of the city will experience blight. We are towards the front end of this cycle. This trend has overcome other cities in the region due to the lack of quick and effective action. Once a city begins this trend it is nearly impossible to reverse. This plan gives Tupelo the leverage needed to stop the trend and rebuild our neighborhoods for the future.
STRATEGY #1: FAST TRACK HOME LOAN PROGRAM
What does the Fast Track Home Loan Program offer?The program will offer homebuyer assistance in the form of a community second mortgage in order to reduce or eliminate homeowner down payments and private mortgage insurance.
Who can access the loan?
Anyone who wants to purchase a primary residence in the City of Tupelo, regardless of income level, who can meet private bank mortgage loan approval and credit standards can apply. People who have poor credit are not qualified to participate.
Why start with a $10,000,000 loan program?
Home ownership is the cornerstone to a balanced and healthy community. Providing $10,000,000 worth of community second mortgage financing impacts roughly 300 homeowners, the minimum amount needed to regain momentum for new growth.
Why is this a good investment by the City of Tupelo?
For every $1 loaned, it is matched by $4 in private investment, thus the City is creating an additional $40,000,000 in private home ownership investments, enabling over 300 families to stay or relocate to Tupelo for a total impact of $50,000,000 through this component of the plan.
Is there a limitation on the value of the home?
No, but the maximum borrowable amount for the community second mortgage is $70,000. For example, a family purchasing a $150,000 home would be eligible for a community second loan up to $30,000 (or 20% of the total loan). Upon purchasing a $150,000 home, the owner would have a private primary mortgage of $120,000 and a community second mortgage of $30,000.
Why will this help Tupelo families?
It reduces the upfront cost and minimizes the need for private mortgage insurance. A down payment for a conventional loan is one of the greatest barriers to purchase a new home. In today’s lending market, most Tupelo families, especially middle class residents, only qualify for a conventional loan, requiring a minimum 5% down payment. If homebuyers cannot provide at least 20% down, they will be required to maintain costly private mortgage insurance. This strategy will help Tupelo compete with adjacent communities having more advantageous financing options.
Won’t this program allow people to buy more house than they can afford?
No. Applicants for the home loan program must apply through a private bank and meet their criteria. Bank underwriting policy has changed in recent years to help prevent defaults and keep mortgage holders from manipulating the standards.
How will default be paid? By Tax Dollars?
No. Probable default costs were estimated using average bank default rates from the last few years. The interest charged and the revenue from payments will be used to cover defaults.
STRATEGY #2: IMPROVING TUPELO’S COMPETITIVE HOUSING
How does Tupelo improve its competitive housing?
This strategy has three direct recommendations:- Work with developers, engineers, and planners to modify current city policy to reduce new residential development infrastructure costs by 10% or greater.- Create a home improvement grant program to generate $2,500,000 in renovation investment in homes over 15 years old.- Target, acquire, and remove blighted and substandard housing units in Tupelo.
Why offer a home grant?
A high percentage of Tupelo’s housing is over 15 years old. The lack of available capital greatly decreases the ability to rehab Tupelo’s existing housing stock and drives buyers to newer homes outside Tupelo’s city limits.
Who can use the home grant?
Anyone who owns a home within the City of Tupelo that is 15 years or older. There is no income limit and no limit on the value of the home on which it can be used.
For what can the home grant be used?
Eligible homeowners can apply the grant funding to any tangible home improvements, such as home additions, remodeling, a new kitchen, new roof, painting, etc. The homeowner will be responsible for proving that project funds were spent on home improvements only.
What is the process for getting a home grant?
Participants will go through financial lending institutions to obtain a home improvement loan on the total value of the project. This places credit approvals, appraisals, and inspection costs on the financial institution, rather than the City of Tupelo. After the work is completed, the financial institution will submit the proper paperwork to the City of Tupelo for reimbursement payment.
How much grant funding is accessible?
Homeowners and Landlords will receive 50 cents on the dollar, up to $10,000. For example, a homeowner or landlord who wants to complete a $15,000 rehab project must fund $10,000 through a home improvement loan, and the home grant will fund the other $5,000.
STRATEGY #3: ENHANCING MUNICIPAL RENTAL STANDARDS
Why increase municipal rental standards?
Research clearly shows a relationship between rental property, public safety, and public school performance. Statistics show that Southern communities with less than 30% rentals typically have a crime rate less than the national average. Tupelo has over 5,000 rental units equaling around 35% of the total residential units in the city. The average amount of rental units in the ten county NEMS region is 25%. Appropriate rental standards and updated city growth policy will help Tupelo maintain a percentage of rental properties proportionate to the regional average.
What impact does this have on Tupelo?
Enhanced rental standards will help reverse the increasing number of rental properties and declining neighborhoods in Tupelo. By combining this strategy with the other strategies laid out in Tupelo Plan, the city can convert more renting families to homeowners. The first step to reversing the trend is requiring more uniform rental inspections which will maintain higher standards for rental properties. The city will use a portion of the collected rental fees towards the second step, acquiring and demolishing substandard housing within neighborhoods. It will take approximately $850,000 a year to implement this strategy to enhance the value of neighborhoods within the city. At a minimum, $500,000 would be annually dedicated for the rehabilitation, acquisition, demolition, and/or legal processing of dilapidated properties. Other collected funds would be used to offset the city’s cost to provide rental and property maintenance inspections.
Why charge Landlords additional rental fees?
The $850,000 must come from either a general tax increase on all citizens of Tupelo or from targeted fees on properties where this will apply. The committee recommends that revenue should come from the source of the cost. The majority of code enforcement time and resources spent by the Department of Development Services are on rental properties. The fee structure will not be implemented for 18 months in order to allow landlords to restructure leases as necessary.
Will this program penalize renters?
No. This program will improve the quality of rental property and ensure a safer, healthier home environment for renting families. The rental standards will protect renters through an increase in property maintenance standards. Renters may incur a small monthly increase in cost if the landlord incorporates the inspection fees into the lease. The inspection fees should not be considered a penalty because the landlord and renter receive an atypical service provided by the city.
Is this an attempt to displace low-income families from Tupelo?
No. Low-income families will continue to have access to federal housing assistance mandated by the federal government. A family can receive up to $1,000 per month towards a housing allowance. This gives them access to many adequate housing options within the city limits of Tupelo. This strategy is aimed at lowering the amount of rental units in Tupelo to an acceptable regional average. It is recognized that a healthy, acceptable amount of rental housing is a necessary element in Tupelo. This plan will assure that the city has quality housing for everyone, regardless of income levels.
STRATEGY #4: TUPELO PROMISE
What does the Tupelo Promise offer?
The Tupelo Promise program provides every Tupelo student, graduating from public, private, or home school, with guaranteed college tuition for four years to any state university. The program pays for college tuition and associated fees for a 8 semester period. The program does not pay for books, lodging, or other necessities. College tuition is considered only one-third of the cost of attending a four-year university.
Who needs or will use the Tupelo Promise?
The Tupelo Promise targets those students who do not receive athletic or academic scholarships and whose families have a higher income that excludes them from the federal Pell grant assistance program. Students, who have limited or no access to tuition assistance, are typically from middle income families. These middle income families will endure financial hardships to send their kids to college or these students will graduate with large student loan debts to begin their adult life. The Tupelo Promise is not a free ride for students, but will help offset the high costs of a four-year college education.
Who is eligible for the Tupelo Promise?
The program is open to public, private, and home school graduates within the City of Tupelo. Students who attend a two-year community college may utilize Tupelo Promise funds to complete their Junior and Senior years at a senior college.
How can we fund this program without raising taxes?
Yes, The City would obligate undesignated funds along with private sector contributions, annually, to pay the costs of these scholarships.
Are students who receive partial scholarships eligible?
Yes. The Tupelo Promise will cover gaps toward the cost of tuition.
What are the expected impacts of the Tupelo Promise?
Tuition guarantee programs have been provided in several locations throughout the U.S. Kalamazoo, Michigan, has offered a tuition guarantee since 2005, and has been able to measure the direct benefits of the program. Those direct benefits include stabilized student population growth, increased graduation rates and testing scores, and improved student achievement. Broader benefits have also been calculated in the community, such as increased property values, recruitment of major corporations and jobs, and stronger community support for public schools. The Promise was conceived as a long-term economic-development strategy, in which creating a better-educated work force and improving the local education system would attract businesses and individuals to relocate. The program has been touted as one of the most creative and successful economic development tools to retain and attract the best and brightest families. It is expected that Tupelo will experience similar results.
Why use tax dollars to help fund the Tupelo Promise?
Student achievement and school support are vitally important to the future of Tupelo. This program, as recommended, is offered to all Tupelo citizens regardless of income or school. No tax increase is required to implement this program. This is a small investment and only costs an average Tupelo taxpayer about $36 per year of taxes already paid to the City of Tupelo.
How does this program interact with scholarships or other forms of tuition assistance?
Eligible students must apply for all other forms of federal and/or state tuition assistance or scholarships. After these initial forms of tuition assistance are applied, the Tupelo Promise guarantee kicks in to pay the remainder of the tuition.
I have invested in Mississippi’s IMPACT Program, how will this affect me?
The Tupelo Promise is only for tuition and associated fees. Tuition amounts to approximately one third of the overall cost of attending a Mississippi university. IMPACT funds can be used to cover other expenses from the university or can be refunded at Mississippi IMPACT program rates and used for other university expenses, or directly refunded. All monies invested can be used in conjunction with the Tupelo Promise.