The February Minnesota Housing board meeting included preliminary approval of the 2016 Qualified Allocation Plan, which are the guidelines the Agency uses to rank competitive applications for federal Housing Tax Credits ($12 million to be allocated by MHFA in 2016). Other meeting highlights include approval of the Tribal Nations Consultation Policy as required of all state agencies, announcement of a new fund for energy efficient improvements to single family homes, and announcement of program administrators for increased funding to the Bridges Rental Assistance program which provides temporary rental subsidy payments for persons with a serious mental illness.
Preliminary Approval of 2016 Qualified Allocation Plan
The board gave preliminary approval to proposed changes to the 2016 Housing Tax Credit Qualified Allocation Plan (QAP). The QAP will guide the Agency's ranking and awarding of about $12 million in federal housing tax credits that the state will allocate in 2016. Minnesota Housing administers about 70% of that amount, with the remainder allocated by four local government agencies. The proposed changes are meant to address areas in which the current credit scoring was not adequately achieving the objectives of the Agency, based on staff analysis of 2014 awards.
The Agency will a host a public hearing on the proposed 2016 QAP changes on March 17, with the board expected to approve the QAP at its April 24 meeting. These criteria will apply to development proposals to be submitted in June of 2015, and awarded by the Agency the following October.
Examples of proposed changes include numerous scoring changes and one major process change:
Transit and Transportation Points
- The transit and transportation points did not appear to lead to selection of transit oriented development projects as much as the Agency expected. The staff proposes adding walkability criterion using the Walk Score measure, and changing the name of the transportation scoring category to "locational efficiency."
Economic Integration Points
- The economic integration points did not affect project location to the extent expected, so points awarded under this category were increased.
Housing Special Population Points
- Universal design conformance replaced points for housing special populations, consistent with the state's Olmstead Plan for reducing the number of disabled people in institutional settings.
- Other changes touch upon qualifying for community revitalization, homelessness, basis boost to achieve financial feasibility, availability of rent assistance, and serving lowest income tenants.
Major Process Change
Housing Preservation Process Change
- The various forms of preservation (programmatic and property physical needs) are being merged under one scoring category, and competitive points are to be allocated to ensure projects only in the best locations are preserved. Additionally, a pre-application process will be enacted to inform developers on the competiveness of their proposals prior to the developer undertaking a full proposal. And finally, dual 9% and 4% (with tax exempt bonds) applications will be required to enable the Agency to utilize 4% credits where possible.
Response to Orfield Report
Commissioner Tingerthal noted that some of the changes proposed for the 2016 QAP, listed above, relate to topics raised in a recent report by University of Minnesota professor Myron Orfield. Tingerthal shared that the Agency recently developed a document that showed its distribution of tax credits to projects in the Twin Cities. The report showed that new family rental housing developments receiving credits from the Agency were mostly located in suburban communities, while preservation and supportive housing developments were more likely to be located in central cities. Tingerthal noted that the report addresses only investments made by the Agency through its own credit allocations and those administered through joint powers agreements and does not evaluate investments made by the cities of Minneapolis and Saint Paul or Dakota and Washington counties, who administer their own housing tax credits.
Approval of Tribal Nations Consultation Policy
The Board approved the Agency's Tribal Nations Consultation Policy with the goal of facilitating better understanding and informed decision making on matters of mutual interest between the 11 federally recognized tribal nations in Minnesota and the Agency. Deputy Commissioner Barb Sporlein provided an overview of the Governor’s Executive Order, which requires all state agencies to formally enact such a policy annually. The initial policy document lays out principles for the Agency's relationship with tribal governments, such as recognizing "individual tribal nations as the appropriate party for making tribal nation housing policy decisions and managing housing programs on tribal land." Consistent with this policy, priority issues for consultation with tribal nations in 2014 include most of the major program areas of the Agency: the tax credit and the RFP processes, preservation, multifamily lending, homelessness, and homeownership. Agency staff working with tribes will receive training related to State Government-Tribal Relations.
Reduction in Interest Rates for Single Family Energy Efficiency Improvement Loans
Staff presented the recommended awards for the Community Fix Up loan program and Targeted Home Improvement program. The interest rate on the loans, of up to $15,000 to increase energy efficiency of single family homes, will drop by 2% (to 4.99%) because the Minnesota Department of Commerce pledged $1 million for a loan loss reserve fund. Funding for this reserve comes from the American Recovery and Reinvestment Act (ARRA). These loans will be available throughout the Agency's lending network.
Program Administrators Named for New Bridges Rental Assistance Program Funds
In May 2013, the Minnesota Legislature appropriated $5,276,000 for unexpended Bridges Rental Assistance program funds through existing program administrators, plus $400,000 in new funding for which the Agency issued a Request for Proposals in November 2013. Minnesota Housing received twelve proposals and staff recommended approval of five. The board approved the five program administrators to share the $400,000 in increased Bridges program funds, including Blue Earth County CDA, Dakota County CDA, St. Cloud HRA, Mental Health Resources of Hennepin County (new), and Metro HRA. The Bridges program provides temporary rental subsidy payments for persons with a serious mental illness.
The meeting ended on a high note with the board receiving notice that for the first quarter of this program year the Agency realized about $15 million in net revenue. Staff told the board that revenues were now at the level being obtained in 2007, just prior to the onset of the financial crisis.