At its January meeting, the board of the Minnesota Housing Finance Agency (Minnesota Housing) discussed the allocation of 2018 funds for the Minnesota City Participation Program, potential changes to the 2020 Tax Credit Program Qualified Allocation Plan (QAP), highlights from the recently released Key Trends in Housing, work plan priorities for the coming year and the progress of the Governor's Task Force on Housing.
In her opening remarks, Commissioner Mary Tingerthal shared that the Governor had released his public works proposal, which includes $100 million for Housing Infrastructure Bonds and $15 million for General Obligation Bonds. The most ever requested for housing by the Governor, Tingerthal said it was a good place to start and that Minnesota Housing will be carrying that strong recommendation into the session. (The Homes for All coalition is asking for $140 million in HIB and GO bonds this session; read the full agenda here.)
Tingerthal also noted one policy item in the Governor’s package: a change to the Manufactured Home Trust Fund, which levies an assessment on owners of manufactured home parks of $15 per lot per year that goes into a trust fund that is then available for relocation costs for low-income households that have to move when parks are closed. Previously, that fund was capped at $1 million, but, with two parks’ closing nearly wiping out the whole fund, the proposal is to increase the cap to $3 million.
Allocation of 2018 funds for the Minnesota City Participation Program
Under the Minnesota City Participation Program (MCPP), Minnesota Housing sells tax-exempt private activity bonds on behalf of local governments to assist them to meet local housing goals. Cities, counties and consortia of local government units applied for 2018 participation in MCPP by January 15 and the total amount available — $60.1 million — was allocated on a pro rata basis according to the population of each community that applied and met the program requirements.
Changes considered in the 2020 Housing Tax Credit Program Qualified Allocation Plan (QAP)
Devon Pohlman, Supervisor of the Multifamily Programs Team at Minnesota Housing, opened discussion about changes considered in the 2020 Housing Tax Credit Program Qualified Allocation Plan (QAP) by emphasizing that the agency understands that developers are already thinking about 2020 and beyond, and wanted to ensure that the concepts and changes considered in the QAP were brought forward earlier in the process. She also noted that given the significant changes in the 2018 QAP, the agency is taking a “focused approach” with proposed changes for the 2020 QAP only recommended for critical policy or clarification purposes.
Key changes are identified below in three categories based on their impact on: projects with 9% tax credits allocated through the competitive RFP process; tax-exempt bond/4% projects selected through the competitive RFP process; and projects receiving tax exempt bonds through the Minnesota Department of Management and Budget (MMB) and seeking an allocation of tax credits through the 4% only (42M) process.
John Decramer, board chair, asked for clarification on the cost containment penalties; specifically if they would fall in the next application from that developer. Commissioner Tingerthal confirmed and explained that the reason for the proposed change is that, in a competitive process (or in a noncompetitive process that requires a score of 40 points or higher) cost containment points could result in a project getting funded and, if those costs are exceeded, that funding might have gone to another project, constituting a serious error.
John Patterson, Director of Planning, Research and Evaluation, presented on the agency’s recently released Key Trends in Housing, which included data points in the following areas:
Members of the board reflected on several areas of the report, including:
- Concern that the state is losing affordable units as fast, if not faster than, new units are being built
- Cities are using the frequency of police reports at a particular property as a rationale for upscaling
- In addition to accessibility and availability, there needs to be more focus on affordability, especially as property taxes trend upwards
- More production and increasing the inventory of multi-family units is imperative
- More attention needs to be paid to the “missing middle” — households making $50,00 or $60,000 who can afford market rate but only at the lower price range
As part of Minnesota Housing’s 2016-2019 Strategic Plan, each division develops an annual work plan that identifies funding and production levels, key division/section activities, responsibilities, expected outcomes and program level measures. While not an exhaustive list, highlight for 2018 for each division include:
Update on Governor's Task Force on Housing
Commissioner Tingerthal updated the board on the progress of the Governor's Task Force on Housing, noting that the first full meeting occurred on January 22 (pictured right) but the engine of the process will be the three work groups on Home Ownership, Rental Housing and Housing Stability (description and co-chairs below). Over the next several months, those group will be seek public input, conduct analysis on opportunities and gaps, and explore and form consensus opinions on recommendations that will come back to the larger task force for consideration.
Terri Thao, board member and co-chair of the Task Force Work Group on Home Ownership, shared that the first meeting had good attendance and creative engagement, featuring a mapping exercise with a visual facilitator who helped the group sketch out the landscape and come to shared problem definitions. The meeting also included individual stories from impacted community members, she added, which helped to put a name and face to the urgency and immediacy of the work ahead. She emphasized that people are really hungry to get to solutions and strategies given the short six-month timeframe, but also eager to do a lot of learning along the way.
All meetings of the task force are public and listed here.
The next meeting of the Minnesota Housing board will be February 22 at 1 p.m. More information here.