Council launches new land acquisition loan fund 

One of our region’s lesser known but more impressive success stories involves a program known as “RALF,” which stands for the Right-of-Way Acquisition Loan Fund.

For more than two decades, the Metropolitan Council has used this revolving fund to assist cities in acquiring land threatened by development that is located within officially mapped rights-of-way for metropolitan highways.

The Council levies a small annual property tax to maintain the fund and provide the loans. When the Minnesota Department of Transportation is ready to purchase the land for highway construction, it buys the property from the city at the price paid for the property and the loan is repaid to the RALF account.

Since the program’s inception, the Council has made nearly 100 loans totaling more than $54 million. We estimate that the early acquisition of land through these no-interest loans has saved the cities and MnDOT more than $33 million.

The Council now plans to use this model to establish a revolving loan fund to assist communities in acquiring land for affordable housing. We recently set aside $4 million to launch the program, which will be undertaken in collaboration with Minnesota Housing and the Family Housing Fund.

We know that there is a huge unmet demand for affordable housing. The Council estimates that our region will need an additional 51,000 affordable units between 2010 and 2020, and we have asked each community in the region to guide enough land to accommodate its share of these units.

While many details of this program remain to be worked out, we expect to provide loans to acquire land for future housing developments where at least 20 percent of the units will be affordable. Developments must be started within five years of the loan agreement.

In the coming years, as land prices escalate, this new program should help cities meet their affordable housing needs and reduce costs through the early acquisition of land.

Peter Bell

April 2008