Minnesota Housing’s February board meeting was Mary Tingerthal’s first meeting as Commissioner. She took time to discuss the state’s budget situation with a still depleted board, with Governor Dayton yet to fill two vacant positions. Other items of note: a lengthy follow up discussion on how transit preferences impact rural communities’ ability to compete for funding, and approval of a spending plan for the third round of foreclosure recovery funds.
About the Budget
Tingerthal told board members that the 5 percent (or $4 million) reduction in the agency’s budget proposed by Governor Dayton was likely to be the high water mark for state spending on housing. House Economic Development and Jobs committee chairman Bob Gunther had told Tingerthal that a 20 percent reduction was likely.
A Transit/Rural Divide
Staff responded to board concerns voiced in January that the proposed plan for scoring housing tax credit applications treats rural communities unfairly, due to scoring incentives for access to transit. Using Hoyt Lake and Duluth as examples, staff explained that when transportation costs were added to housing, it was more expensive for families to live in small communities compared to metropolitan areas with available public transportation. Staff pointed out that federal policy has endorsed proposals which minimize combined housing and transportation costs.
To help smaller communities be more competitive for tax credits, staff proposed that points available to areas minimizing transportation costs also be given to projects located within five miles of at least 2,000 low and moderate wage jobs, and that are within one-half mile of services such as medical centers, child care, food stores, and libraries.
Board member Barb Sanderson took exception to the staff recommendations. She said that while Minnesota Housing cannot address housing needs in every community, the agency could do a much better job developing strategies to assist smaller communities. Sanderson said that significant areas of Greater Minnesota were still not eligible for the points under the staff proposal. She wanted to see an entire plan for addressing rural needs before passing judgment on the proposed tax credit scoring modification.
Many of the transit-related rules staff pointed to, she added, were set by the board and can be changed by the board.
Chair Mike Finch said that he agreed with Sanderson. He added that his concerns were not just about the tax credit plan, but more generally about how rural communities are served. This was an issue of fairness he added, and he hoped that the staff would come back in a few months with a plan for how the agency can best serve the entire state.
Commissioner Tingerthal suggested that Greater Minnesota Housing Fund address the board on serving rural areas. She said that the agency would want to direct investments to locations where several generations would benefit, and that the agency thinks about feasibility over the long term.
Board member Otto said that with this discussion in mind the board should review its recently updated strategic plan once its new members are seated.
Plans for NSP 3
With little fanfare, the board adopted staff recommendations for the use of $5 million in third round Neighborhood Stabilization Funds (NSP) coming from HUD to the agency for foreclosure-related activities.
Highlighting one change since the draft NSP plan was introduced, staff said Anoka County withdrew its application. $600,000 in funds allocated to the county would be reallocated to other areas. The county informed the agency that the amount proposed for its administrative costs, $30,000, was inadequate to support the required administration of the funds. Anoka is still slated to receive $1.2 million directly from HUD.
The agency’s NSP funds will now go to six local governments to use in areas where a minimum of 20% of foreclosed properties can be treated. The agency expects that altogether, 74 housing units will be treated, with 13 of these to be renter occupied. The per-unit subsidy to make the housing marketable will range from $33,000 to $78,000.
Looking ahead to next month’s meeting, board members will review several items of interest to housing developers. The tax credit Qualified Allocation Plan will be back for final approval. There will be a report on the organization of the agency’s multifamily division, and the board also will see recommendations for the distribution of operating funding for Community Housing Development Organizations (CHDOs).