In her opening remarks at the MN Housing February Board Meeting Commissioner Tingerthal introduced a new board member, Terri Thao. Thao is a Program Director for St. Paul based Nexus Community Partners. Tingerthal said that the governor was also reappointing current board chair John DeCramer, an engineer from Marshall.
Tingerthal updated the board on the fair housing complaint facing the Agency and several other jurisdictions. She said that the focus of the complaint with the Agency concerned the tax credit Qualified Allocation Plan. She and HUD staff met with representatives of MICAH and other complainants the day before the board meeting. She said that there was a connection between issues raised in the complaint and HUD Secretary Castro’s planned March 4 meeting in Minneapolis to pitch HUD’s Prosperity Playbook. Minneapolis is the second of five communities Castro is visiting to pitch the playbook initiative which is intended to provide best practices that HUD will profile on its new inclusive community website.
Scoring Revisions to Impact Fund
The board approved scoring revisions to the Impact Fund (the single family use of Challenge Fund dollars) to take effect for the 2016 RFP. There was a big drop in points for addressing foreclosures (from 5 points to 1) and staff said that in the improving market foreclosure work had been dropped as an agency strategic priority. Another major shift in points also occurred in the priority area of supporting underserved populations. The general category was replaced by points for specific targeted populations (e.g., 4 points for households of color or Hispanic ethnicity; 1 point for single parent household or disabled individuals; 2 points were added for helping seniors age in place). The 4 points for workforce housing remained the same, but to get the points the proposed housing no longer needed to be included in a “cooperatively-developed plan.” A final major change is that “community need” was increased from 5 to 10 points; this was to equate this criterion to the priorities “overall project feasibility” and “organizational capacity.”
2018 Qualified Allocation Plan
The board approved the release of the draft 2018 Qualified Allocation Plan. This will go out for public comment, with comments due March 24. In addition, the Agency will host a QAP information session at 11:00 a.m. on March 15. The Agency expects to receive about 12.8 million in federal tax credits, with about 25% of that amount administered by sub-allocators.
One of the major changes proposed by Agency staff includes adding points related to people with disabilities, aligning with use of federal 811 program resources. Another consideration included offering more incentives for developers to propose 3+ bedroom units in Greater Minnesota.
Staff also revised Areas of Opportunity to provide points for development in areas with several “opportunities” available, including high performing schools. Board members expressed concerns about the Agency staff or developers knowing which schools were superior. Staff said that there would be maps, based on factors developed by education researchers, which will highlight those areas. Board chair DeCramer expressed that this criterion could hurt areas whose schools experienced large influxes of immigrants. Staff replied that this scoring criterion keeps the QAP consistent with the new Affirmatively Furthering Fair Housing (AFFH) rule, which they said requires inclusion of school performance in funding awards. However, they added, this opportunity criterion only applies to the Twin Cities, Duluth, Rochester and St. Cloud. Tingerthal said that the QAP in its entirety does attempt to reflect the AFFH balance between opening up areas of opportunity to lower income households and directing resources to assist impoverished communities. Tingerthal added that she wanted to see what comments come in related to the opportunity category.
Staff noted while running through some other changes to the draft QAP that for housing preservation, there would be a tiering of points based on percentage of units assisted. Also, there would be additional points allowed for cost containment. Staff said that a significant number of developers had recently decided to not apply for cost containment points because of volatility in construction costs and not wanting to risk the penalty they would face should their actual costs exceed what they had proposed. Therefore greater incentive was needed to get developers to “sharpen their pencils.” Director Garnett said that he wanted to see comments related to the cost containment factor but thought it might be better for the Agency to just do away with that criterion. Garnett also asked how the state would know whether a developer was using the women and minority enterprises as stated in their proposals; staff said that state classifications were used but that proof of fulfilling this commitment came in the form of a developer certification.
In a brief report on the 2016 first quarter’s activities under the Affordable Housing Plan, John Patterson told the board that the agency continued to have strong performance in single family mortgage lending but it fell behind in multi-family production. One major issue was a drop in equity raised from 4% tax credit projects, it dropped from $84 million in 2014 to $19 million in 2015. Staff will further investigate to see if this was a one year anomaly.
Workforce Housing Update
Policy director Ryan Baumtrog provided the board an update on the agency’s support for workforce housing. He said that this was a big issue in Greater Minnesota, one that came up as a priority in every one of the agency’s regional dialogues. He said that workforce housing has been a long time concern of the agency, running back to the creation of the Challenge program, but that it was increasing in priority. At the capitol there continued to be confusion over the topic and what constitutes workforce housing. The agency was still talking to DEED and the governor’s staff about potential solutions for this legislative session, and that the agency will also bring single family homes into the workforce housing conversation. Chair DeCramer said that he was aware the Coalition of Greater Minnesota Cities was promoting a new state tax credit program to address the need.