At the November Minnesota Housing board meeting, the highlights included an announcement of a new State Director to Prevent and End Homelessness, and the Agency committed the remaining bonding authority allocated to it by the 2012 Legislature. The board and staff discussed where the Agency faced the greatest risks, as well as the challenge of using pay for performance, or social impact bonds.
Agency Announces New State Director to Prevent and End Homelessness
Cathy ten Broeke has been named as the new State Director to Prevent and End Homelessness. Cathy has a long history working on homelessness issues, most recently as the Coordinator to End Homelessness at City of Minneapolis/Hennepin County.
Agency Awards Bond Funds for Public Housing Improvements
The board signed off on the second set of agencies and projects benefitting from the bond package approved by the legislature this spring. Fourteen public housing agencies received funding commitments totaling $5.5 million in bonding for public housing improvements. 950 of the state's 20,000 public housing units will benefit from 20-year interest-free forgivable loans as a result.
The funds will be used to improve ventilation and reduce energy consumption, upgrade plumbing, remove lead-based paint, and pay for disability access improvements. Jonathan Stanley, coordinator for the publicly owned housing program, said that much of the funding will preserve housing for low income seniors and the disabled.
Recipients include four Twin Cities and ten Greater Minnesota public housing agencies. The largest funding commitments, at $825,000, are going the St. Paul PHA and Staples HRA; while the smallest, at $79,000 is committed to the Hutchinson HRA.
The staff recommendations were adopted without board discussion, though after the vote Chair Ken Johnson expressed his concern about the need to use state funds to preserve federal assets.
Agency Assesses Risks
In other business, the board spent considerable time receiving and reviewing the annual report on risks facing the Agency. Staff presented a risk graph for the Agency that looks at the level of potential negative impacts, as well as the probability that such impacts could occur throughout the Agency's operations. Chief Risk Officer Will Thompson stated that the greatest risks to the Agency are connected to the challenge of keeping information systems current, interest rate and bond market variability, and the vulnerability of a wide variety of Agency partners (ranging from Fannie Mae, the entity insuring some of the Agency's debt, to partner organizations that administer Agency programs).
In assessing the Agency's profile, Commissioner Tingerthal said, as a $3 billion financial institution, the Agency is in an inherently risky business. The report also discusses risk mitigation initiatives and measures, and assesses the level of residual risk for each category taking into consideration these mitigations strategies.
Social Impact Bonds Questioned
At the meeting's end, the board had a brief conversation about "return on dollars" in connection with the Pay for Performance Pilot Project demonstration passed by the 2012 Legislature. The Minnesota Office of Management and Budget released an RFP in November seeking firms to assist the office in evaluating proposals to reduce state costs or increase revenues through supportive housing investments. Commissioner Tingerthal said that "pay for performance" programs can run into the challenge of linking financial cost to benefit within the fiscal confines of governmental programs at the state level, as opposed to other levels of government. With many of the state's housing investments, she continued, the financial benefits, such as lower demand on police services, occur at the local government level.