By Heather J. Carlson
Post-Bulletin, Rochester MN

Rochester and southeastern Minnesota will receive $1 million in affordable housing grants aimed at helping people buy and repair foreclosed homes.

In total, Minnesota communities will receive more than $6 million in housing grants through the Federal Home Loan Bank of Des Moines.

The risk for crime goes up and home values go down as the number of foreclosed homes increases, U.S. Sen. Amy Klobuchar said when she announced the grants Tuesday in Rochester.

"Pretty soon the home values in the neighborhood go down, and that doesn't just hurt the people that were foreclosed upon, that hurts the entire neighborhood," Klobuchar said.

In this region, First Homes, a Rochester-based public-private collaborative group that assists with housing, will receive a $500,000 grant, which will be administered by Home Federal Savings Bank in Rochester. Three Rivers Community Action will also receive $500,000 to help address foreclosures in southeastern Minnesota. The Bank of Zumbrota will oversee that money.

The money will go toward purchasing, building or rehabilitating rental and single-family housing with an emphasis on foreclosure properties. It's projected that the money will lead to 464 affordable housing units being created or rehabilitated and an economic impact of $60 million in Minnesota.

Federal Home Loan Bank awarded 29 grants totaling $10.4 million in 2008. Each year, the bank commits 10 percent of its net income to developing affordable housing.

In Rochester, the grant money will be part of a larger package of funding that will be used to buy, rehabilitate and sell foreclosed homes, said Sean Allen, executive director of First Homes. It will also help people get affordable mortgages to buy homes.

"It really brings affordable mortgage products to homebuyers," he said. "And it's specifically targeting the downtown core because we believe that the downtown core's vitality is critical to the downtown itself and its vitality."