The implications of a probable government shutdown colored much of the Minnesota Housing board's discussion in June. Still, the Agency was able to look ahead with a presentation on major housing concerns facing the state as background for preparation of the Agency's next two-year plan, sparking a lively discussion about housing in relationship to transit. The Agency also took a closer look at Indian housing programs.
The board and staff also paid tribute to Mike Finch, long standing board member and former chair. This was Finch's last meeting after 20 years of service, ten of which he served as chair.
Government Shutdown Contingency Plans
Commissioner Mary Tingerthal briefed the board on Agency contingency plans should a state government shutdown occur. These plans, part of the governor's proposal for a low level functioning of state government, are subject to the court's decision.* Because most Agency employees support activities where an abrupt work stoppage would cause substantial harmful economic impact or inhibit carrying out contractual duties, the governor deemed 160 of Minnesota Housing's 210 employees as performing work that should continue during a shutdown. These essential services included duties related to the rental and ownership loan programs, Section 8 administration and other contracts with HUD, and disaster response.
To maintain the distribution of rental assistance during a shutdown, the board approved a contingent use of Minnesota Housing's own resources. This required drawing from resources for to the plan to end long term homelessness for use by families who are not long-term homeless, but qualify under Housing Trust Fund and Bridges rental assistance programs. Agency homeless resources plus recaptured program funds would provide $2.3 million for rent payments for 2,000 households, and are expected to last only about two months.
The board allocated $15 million in funds to administrators of the Family Homeless Prevention and Assistance Program (FHPAP) with the understanding that they might not be distributed during the period of a shutdown. This program provides grants to keep families from living in shelters. In the current biennium 16,500 households were helped through assistance with rent and transportation, security deposits, and financial literacy training. Proposed for 2012-13, 20 providers would distribute these funds in 82 of Minnesota's 87 counties.
Because FHPAP is entirely funded by state appropriations, Commissioner Tingerthal said that the Agency would not release the $15 million awarded by the board if there is no budget agreement. Tingerthal added that this is one of the programs where the governor and the legislature were in complete agreement on the budget amount and need for this program, yet it might not be implemented due to the budget impasse.
For a list of services that are available during the shutdown, visit Minnesota Housing's Shutdown FAQ's.
Research Briefing: Cost Burden, Foreclosures, and Transportation
In support of the creation of the 2012-13 Affordable Housing Plan, the Agency's next two-year plan, the Agency's research director John Patterson provided an overview of housing issues impacting the state. Patterson said that while both renters and owners in Minnesota have faced increased cost burdens over the past decade, the reasons varied. For renters incomes declined while rental costs were flat, while for owners incomes were flat while costs increased. The results in cost burden increase were about the same, however. Between 2000 and 2009, the percent of Minnesota cost burdened renters increased by 12 percent (to 50%), and owners increased 11 percent (to 28%).
Regarding foreclosures, Minnesota had the 14th highest rate in the country, said Patterson. Minnesota was in the tier of states just below the group of foreclosure-devastated states including Arizona, Florida, and Nevada. Patterson added that in spite of high levels of foreclosure, Minnesota still has the country's highest rate of homeownership.
Board members spent the most time reacting to the emphasis placed by staff on using a calculation of housing plus transportation costs to guide program investments. Patterson, looking to national data, had said that for every dollar saved in housing costs by moving away from employment centers, transportation costs increased by over 77 cents. Member Barb Sanderson responded that the importance of transportation costs varied in different areas of the state. Mike Finch added that most high transit areas also were areas of concentrated crime and lower educational performance; therefore the Agency should be careful about using single factors to steer housing choices. Commissioner Tingerthal said that the new tax credit allocation plan (QAP) does account for transportation differences in rural communities, and also the Agency awards points for location in areas of opportunity, such as job growth.
Member Stephanie Klensing said that it was important to consider housing in connection with other concerns such as transportation and energy costs, since these policy areas receive significant public attention, particularly compared to housing. The Agency needs to make sure that housing is seen in connection with other more prominent social issues. Finch replied that was well and good to do this with external audiences, but in preparing its strategic plan, the Agency should not design programs around reducing costs other than housing.
Indian Program Report
In another information item before the board, Rick Smith, the Agency's coordinator for Indian programs, presented an overview of the Agency's work with respect to the Indian community. In his report, Smith said that Minnesota is the only state with Indian housing programs. In total, Minnesota has appropriated $55 million to Indian programs and assisted 2,700 tribal members in purchasing or improving their homes. Recently, more attention has been given to understanding and addressing Indian homelessness, reported Smith. Reservations experience high unemployment, 40 percent is not uncommon, and waiting lists for housing assistance are increasing as tribal members migrate to reservations from urban areas hit by the recession. Smith said that in response to Indian homelessness in Minnesota, three housing developments have recently been completed, two are under construction, and two more are being processed.
*On Wednesday, June 29 Ramsey County District Judge Gearin ruled that the governor’s list of critical core government functions would be exempt from a shutdown, as would agreements the state has entered into with the federal government, and obligations under the MN and US Constitutions. As of early June 30, precise implications for Minnesota Housing programs are not yet clear.
