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Tupelo Neighborhood Reinvestment Plan

                       March 21, 2011
Opportunity for Reinvestment:
Within the past ten years, Tupelo has not capitalized on its share of growth opportunities. Tupelo has
experienced both an out-migration of families and a reduction in owner occupied homes in established
neighborhoods. As a result, older neighborhoods with fewer amenities have experienced depreciation
and an increase in rental homes. At the same time, the out-migration of middle-income families has
caused an unhealthy socioeconomic shift in our public school system. This growth trend is a common
and difficult challenge for maturing cities across the country. Mississippi cities, such as Jackson,
Meridian, Hattiesburg, and Memphis, Tennessee, have all experienced this challenge. In the past ten
years Tupelo has been impacted by a shift of new residential growth into outlying communities that
have available development capacity.

Compounding these challenges are the following: Several cities adjacent to Tupelo provide less
expensive, larger home lots and homes with an attractive public school system. Access to capital has
tightened due to a depressed housing market and bank lending contraction. One of the largest
growing USDA home mortgage programs in our region is not accessible to Tupelo by law because
Tupelo is defined as an urban area. Therefore, in many cases, Tupelo does not offer an advantage to
today’s homebuyer.

Tupelo must improve its competitive community advantage to maintain its success and promote
neighborhood reinvestment and family recruitment. For this reason, the following four strategies have
been developed by citizen-led groups coordinated by the Community Development Foundation.

                          Overview of Reinvestment Strategies

                                              Strategy 1

 Establish a Fast Track Home Loan Program that will attract $50,000,000 in home investments in

                                             Strategy 2

                       Improve the competitive housing product in Tupelo.

                                             Strategy 3

Establish municipal rental standards to protect renters and property owners in order to foster public
                  safety, sustain school performance, and stabilize neighborhoods.

                                             Strategy 4

              Establish the Tupelo Promise to retain and attract families with children.

                        The investment breakdown percentage of the plan:

                          Tupelo Neighborhood 5-Year
                              Reinvestment Plan

                                                                                   Strategy 1
                                                                                   Strategy 2
                                                                                   Strategy 3
                                                                                   Strategy 4


                                             Strategy 1
    Establish a Fast Track Home Loan Program that will attract $50,000,000 in home investments in


Homeowners are a community’s greatest assets. A homeowner investment in a community is the best
strategy to revitalize neighborhoods, improve schools, and lower crime. Few communities truly invest
to improve this asset and create strategies to increase the opportunity for homeowner investments.

Tupelo is competing against outlying communities for these homeowner investments. The quality of
schools, public safety, and livability attractions are determining factors to attract and retain these
homebuyers and homeowners. Tupelo homes are then compared to the surrounding communities’
homes in quality, age, availability, and cost. However, a greatly overlooked factor is the inability of a
potential homebuyer to make the required down payment to purchase a home.

Down payment requirements are one of the greatest barriers for people to become homeowners. The
outlying communities can access a federal USDA Guaranteed Rural Housing loan that provides
prospective homebuyers 100 percent financing. However, this program cannot be offered inside the
city limits of Tupelo as prescribed by the Guaranteed Rural Housing program. This creates a
competitive disadvantage to attract first time, low, and middle income homebuyers to Tupelo.

Tupelo also has a high percent of residential rental properties. The majority of these renters pay
monthly rent that would exceed the cost of a monthly mortgage payment. It is believed that some of
Tupelo’s renters could be converted to homeowners if they could overcome the down payment

Additionally, the majority of Tupelo’s housing stock is older than the surrounding areas. While some
of these homes are located in more mature and attractive neighborhoods, these homes need updating
to meet the quality and standards of newer homes. In this capital environment, it is difficult to find the
money to both purchase and upgrade these homes.


•   Establish a $10,000,000 loan fund using Tupelo funds. This amount is estimated to assist 300 home
    purchases in Tupelo.
•   Allow the loan program to be a 20% community second position loan. This position will
    eliminate, if the loan program allows, the cost of private mortgage insurance and reduce the
    required down payment to zero. This loan fund would leverage $50,000,000 in home investments
    in Tupelo.
•   Establish conservative loan approval guidelines and require a 1st mortgage approval with submission
    documents to target a default rate of less than 7% over 15 years.
•   Use existing personnel in Tupelo’s Finance Department to approve the loans.
•   Privatize the servicing of the loans to a local lending institution that specializes in loan servicing.
    Allow a portion of the interest earned from the loan to pay for this servicing cost.
•   Establish no annual family income limit or restriction to access the loan.

•   Establish no home value limit or restriction to access the loan.
•   Establish an interest rate that would generate enough revenue to cover the loan servicing costs and
    some of the estimated loan defaults. Using a 1% fixed interest rate would create over $700,000 in

The Tupelo Home Loan Program guidelines:

•   Eligibility: Any person who meets the credit guidelines.
•   Location: Real property located inside the city limits of Tupelo.
•   Type of property: Single family dwellings that will be used only as primary residence.
•   Type of Loan: The Tupelo Home Loan would be a community second position loan.
•   Repayment: Loans would be repaid monthly beginning with the 1st due date of the 1st mortgage,
    payable in equal monthly installments for a term no less than the first mortgage term and/or not to
    exceed 180 months.
•   Use of Funds: Down payment, Closing Costs, Pre-Paid Items toward new home construction or
    existing home purchase.
•   Loan Amount: Loan not to exceed the lesser of $70,000 or 20% of the Purchase price/Acquisition
•   Cash Back: No cash back to the borrower is allowed.
•   Interest Rate: Loan program interest rate will have a fixed rate of 1.0%.
•   Prepayment Penalty: Loan has no prepayment penalty.
•   Loan Advancement: If the occupancy of the subject property changes from a primary residence at
    any time the loan is subject to being called and immediately due and payable.
•   Escrow: Escrow of property taxes and insurance is required on the 1st mortgage loans.

Financial Request:

This strategy will require $10,000,000 in funds either using existing city funds or city bond funds.
Every $1 of public investment would be matched with $4 of private investment. The program will
create $50,000,000 in home ownership investments that will create $162,350 in city taxes and
$326,550 in school taxes annually.

                                             Strategy 2
                          Improve the competitive housing product in Tupelo

A high percentage of Tupelo’s housing stock is over 15 years old, and the cost of new residential
development is higher than adjacent communities’ with competing residential developments. Both of
these factors prevent Tupelo from providing competitive housing choices for potential homebuyers.

Homes of 15 years and older on average are on the market for over 380 days before being sold
compared to 184 days for homes younger than 15 years old. Buyers, homeowners, and landlords are
having great difficulty in finding renovation financing. This lack of access to capital greatly decreases
the ability to rehab Tupelo’s existing housing stock and drives buyers to newer homes outside of

There are few new residential developments in Tupelo under $200,000 mostly due to costs and profit
margins for developers.


Reduce new residential development infrastructure costs by 10% or greater

•   Establish a subdivision regulations task force made up of developers, engineers, road and
    infrastructure contractors, and city planners that will look at methods, incentives, code changes,
    and/or suggestions to reduce infrastructure cost by 10%.

Create $2,500,000 in renovation investment in homes over 15 years old

•   Establish a $1,000,000 home renovation matching grant fund.
•   Establish a $10,000 maximum amount for each home grant.
•   Establish that the renovation grants be funded as a reimbursable expense through a private lending
    home improvement loan.
•   Allow the grants to be matched under the following guidelines.
     o Homesteaded homes of 15 years and older could receive a 100% match of the private money
         used to renovate homes.
     o Non-homesteaded homes of 15 years and older could receive a 50% match of the private
         money used to renovate the homes.
•   Establish no income limitations or restrictions to access the grant.
•   Establish no home value limitations or restrictions to access the grant.

Target, acquire, and remove blighted and substandard housing units in Tupelo:

•   Establish a $2,000,000 property maintenance fund.
•   Allow the Planning and Development Services Department to administer the program.
•   Concentrate on the removal of dwellings and apartments that would greatly improve the
    attraction, property values, and public safety of surrounding neighborhoods.

Financial Request:

This strategy will require $3,000,000 in funds either using existing city funds or city bond funds.
                                                  Strategy 3
    Establish municipal rental standards to protect renters and property owners in order to foster public
                      safety, sustain school performance, and stabilize neighborhoods

Research of over 25 communities across the South delineates a clear correlation between rental
properties, public safety, and public school performance. Statistics show that Southern communities
with less than 30% rental dwellings typically have a crime rate less than the national average. Research
also generally shows that Mississippi communities with low proportions of rental properties typically
have a higher performing public school district.

According to the latest census data, Tupelo has an average of 5,257 rental units equaling approximately
35% of the total residential units in the city. These rental units include roughly 2,949 apartment units
and 2,308 duplexes and single-family houses. Approximately 1,500 of these rental units are subsidized
through various federal housing programs. In comparison, roughly 30% of the residential units in Lee
County are rental with an average of 25% in the ten county NE/MS region.

It is in the best interest of Tupelo to work towards better managing and lowering the amount of rental
property in Tupelo in a manner proportionate to the region. Tupelo’s crime rate is higher than the
national community average and the Tupelo Public School District is on academic watch.

Maintaining of rental and property maintenance standards in our existing neighborhoods is a critical
factor of sustaining and improving the quality of our home values. Currently, Tupelo does not have
the staff needed to carry out property maintenance enforcement and quality inspections for our rental
properties. There are also times that dilapidated and/or unsightly homes need to be acquired and
demolish for the betterment and protection of adjacent homes in a neighborhood.


•    Target lowering the percentage of rental units to match a regional average of 25%. Update the
     Tupelo Comprehensive Plan to set a maximum target policy for all rental development use. Setting
     policy to lower the quantity of rental dwellings would improve public safety in Tupelo, improve
     the quality of existing rental property, and positively impact our public school district.
•    Establish a new Rental Inspection and Property Privilege Licensing Act for the City of Tupelo. The
     Act would give Tupelo leverage to ensure that rental properties are maintained in compliance with
     property maintenance standards and would require more inspections of rental property to better
     protect renters. The Act would require rental property owners to maintain a security bond or letter
     of credit that could be used by Tupelo to correct building or property code violations. Rental
     property owners would also be required to pay an annual privilege licensing fee. The following fee
     structure example would generate approximately $850,000 per year to be used for this strategy.
     The fee structure should be fully implemented by December 31, 2012 to give landlords the
     opportunity, if needed, to restructure existing leases.

       Rental Inspection and Property Licensing Act Costs/Fees:
       Type                         Security or Letter of Credit          Annual Fee
       Single Family Home                   $10,000                       $240.00
       Duplex (for two units)               $10,000                       $240.00
       Apartment                            $100,000 (per complex)        $120.00 (per unit)

•   Hire additional code enforcement officers/rental inspection officers to increase enforcement. Cost
    of this recommendation to the City Department of Development Services would equal
    approximately $350,000.
•   Create a Neighborhood Rehabilitation program that uses approximately $500,000 per year for:
     o The acquisition, rehabilitation, demolition, and legal processing of dilapidated properties in
         Tupelo. Property cleanup and rehabilitation within existing neighborhoods will help bolster
         surrounding home values and improve public safety.
     o Enhance and support Renter education programs to assist in moving toward home ownership.

Financial Request:

This strategy would create $850,000 annually in new revenue through the collection of rental privilege
license fees.

                                              Strategy 4
                Establish the Tupelo Promise to retain and attract families with children


In the past four years, Tupelo has averaged 125 students per year who attend public universities out of
graduation classes of over 300 students. There is a large percentage of students (roughly 65%) who
receive scholarships, grants, or other forms of tuition assistance.


Establish a Tupelo Promise program for five years and after the first four-year student cycle, reassess the
value and return on investment of the program. If determined successful, pursue ways to convert into
a permanent program. The program would offer tuition guarantee assistance to over 1,500 students
during a five-year period. For those who qualify, 100% of college tuition will be guaranteed.

• Tupelo Promise is a four-year tuition guarantee program that provides four full years of tuition
  assistance to any public Mississippi university.
• Eligible graduates must be a current Tupelo resident who has resided in Tupelo for at least five years
  (upon graduation). This includes families who rent or own.
• Program is open to any public, private, or home school graduates, regardless of income, beginning
  with the May 2012 graduating class.
• Participants of the program must apply all other forms of offered tuition assistance before the
  program funding is available, such as scholarships, Pell grants, etc.
• Participants of the program must maintain a 2.0 GPA and complete 12 hours of credit per semester.
• Establish a Tupelo Promise task force to develop the structure, process, and other program
  requirements as necessary.
• Request Three Rivers Planning Development District to serve in an administrative capacity.

Financial Request:

The cost of the program is approximately $3,250,000 over a five-year period or $650,000 per year.
The program must be assured through a Public/Private partnership. Tupelo should commit up to
$550,000 per year with the assurance that the private sector will raise necessary funds to offset
approximately $100,000 per year of additional costs.

Costs of Reinvestment Strategies
The total costs for all four strategies to Tupelo are $15,750,000. According to the Tupelo Finance
Department, the city would need to issue $14,000,000 in urban renewal bonds with remaining costs
being covered with the new undesignated revenue from the strategies. The $850,000 in new rental
privilege license fees and over $700,000 in loan principal and interest payments, as well as existing city
operating funds will allow all of these strategies to be funded without a tax increase.

Return on Investment
The strategies of the Tupelo Neighborhood Reinvestment Plan are interwoven together. The strategies
will create $61,150,000 in reinvestments in the City of Tupelo’s neighborhoods over the next five
years. The strategies recommend $15,750,000 of City of Tupelo investments that would directly cause
$45,400,000 in private sector investments over the next five years.

                       PRIVATE SECTOR                                CITY OF TUPELO
                       INVESTMENT                                    INVESTMENT
                        $45,400,000                                  $15,750,000

Every 25 cents of public reinvestment would create 75 cents of private investment. This creates a
healthy return on Tupelo investments.

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The City of Tupelo and the Community Development Foundation would like to thank the citizens listed
              below who spent their time and efforts on developing this plan. Thank you.

Donna Aycock               BancorpSouth                                 Fast Start Loan Team
Bill Cleveland             RSMS-Respiratory Staffing & Mgt. Services.   Competitive Housing Team
Norma Cother               Crye-Leike Realty                            Competitive Housing Team
Billy Crews                Tupelo Public Schools                        Tupelo Promise Team
Gary Dailey                Cornerstone Construction                     Competitive Housing Team
Jonny Davis                Tupelo Councilman                            Property Maintenance Team
Justin Davis               Shopping Center Group                        Competitive Housing Team
Nettie Davis               Tupelo Councilwoman                          Tupelo Promise
Pat Falkner                City of Tupelo                               Property Maintenance Team
Sue Gardner                Century 21                                   Competitive Housing Team
Gunner Goad                AT&T                                         Tupelo Promise Team
Rubye Del Harden           Sprint Print                                 Property Maintenance Team
Shane Hooper               Success Learning                             Tupelo Promise Team
David Irwin                Cardiology Associates                        Competitive Housing Team
Octavius Ivy               NMMC                                         Property Maintenance Team
Willie Jennings            Tupelo Councilman                            Fast Start Loan Team
Zell Long                  Boys and Girls Club                          Property Maintenance Team
Leslie Mart                McCarty Company-Construction Group           Property Maintenance Team
Justin Martin              Community Bank                               Fast Start Loan Team
Buddy McCarty              Retired Architect                            Fast Start Loan Team
Kenneth McNeal             Gum Tree Mortgage                            Fast Start Loan Team
Guy Mitchell, III          Mitchell McNutt                              Tupelo Promise Team
Jim Newell                 Tupelo Councilman                            Tupelo Promise Team
Lynn Norris                City of Tupelo                               Tupelo Promise Team
John Oxford                Renasant Bank                                Competitive Housing Team
Aubrey Patterson           BancorpSouth                                 Tupelo Promise Team
Darrell Rankin             Lee County Board of Supervisors              Property Maintenance Team
Drew Robertson             US Senator Roger Wicker’s Office             Property Maintenance Team
Chris Rogers               Renasant Bank                                Competitive Housing Team
Charles Russell            Trustmark Bank                               Fast Start Loan Team
Ellen Short                TRI Realtors                                 Competitive Housing Team
B.J. Teal                  City of Tupelo                               Competitive Housing Team
Brent Waldrop              Bancorpsouth                                 Tupelo Promise
Jason Warren               Coldwell Banker Realty                       Fast Start Loan Team
Mitch Waycaster            Renasant Bank                                Fast Start Loan Team
Lewis Whitfield            CREATE Foundation                            Tupelo Promise Team
Markel Whittington         Tupelo Councilman                            Competitive Housing Team

     This plan has been coordinated and prepared by the Community Development Foundation
                David P. Rumbarger Jr.                                   Jon Milstead
                Shane Homan                                              Hunter Aycock

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