For the June meeting of Minnesota Housing’s board, a highlight of the discussion was the volume of housing development applications received this year after the Agency was awarded an additional $100 million in bonding funds at the legislature. Staff reviewed strategies the Agency is using to try to contain costs of developments. Some funds were approved for usage to augment supportive housing services for people who’ve been homeless long term. A new board member was introduced, and the board was informed of a slight increase in the Agency’s administrative costs.
Volume of single- and multi-family project proposals up
Commissioner Tingerthal reported that Agency staff are now busy with review of development proposals. June deadlines for both the multi-family and single family programs have now passed, and staff will bring funding recommendations to the October board meeting. For multi-family, the Agency received rental applications for 85 projects, requesting $262 million in deferred financing, $50 million in first mortgage loan financing, $93 million in bond financing, and $58 million in housing tax credits (31 projects submitted dual applications). For home-ownership activities, 46 applications requesting $19.6 million were received. For comparison, in 2013 the Agency received 72 rental applications requesting $86 million in deferred loans, $39 million in mortgage financing, and $23 million in tax credits. 44 home ownership proposals were received in 2013, totaling $15.9 million.
Review of cost containment strategies
John Patterson, Director of Planning, Analysis and Evaluation, provided the board an overview of the Agency’s three primary cost containment strategies. First, said Patterson, is employment of the predictive cost model. The Agency evaluates each proposed rental project on a per-unit basis against what would be predicted for that unit type based on 18 project characteristics. For any project with costs that exceed the predictive model by 25% or more, staff must seek a waiver from the board. Under its second strategy, the Agency awards four housing tax credit scoring points for projects that are in the lowest one-half of per unit costs for their project type (e.g., new construction family development located in Greater Minnesota). Here, Patterson said, the Agency strikes a balance between providing a modest point advantage to lower cost projects, without discouraging developments from meeting other Agency priorities. Under its third cost-containment strategy, the Agency co-sponsored the Minnesota Challenge to Lower the Cost of Affordable Housing competition. The first awardee of the competition is University of Minnesota’s Center on Urban and Regional Affairs, which proposed to research local government best practices and help Twin Cities communities reduce project costs by modifying local regulations and reducing fees.
Support for supportive housing
One way the Agency keeps supportive housing financially viable is by providing operating support. Where possible, the Agency does this through funding partnerships that leverage non-housing funding. One such partnership with the Department of Human Services (DHS) was renewed by the board in June. The Agency is providing $125,000 from its ending long-term homeless program account matched by $152,000 from the DHS program Services for Adults with Serious Mental Illness. Five local agencies, two in the Metro and three in Greater Minnesota, will receive the funding for 75 supportive housing units (averaging just over $300 per unit per month). The Agency’s staff report stated that 60% of this funding will support family housing, and 40% will support housing for single adults. The bulk of funds (74%) will cover revenue shortfalls, and the remainder will cover front desk costs or costs of a tenant service coordinator.
New board member
Commissioner Tingerthal introduced George Garnett as the Agency’s newest board member. Garnett, currently director of strategic development for Summit Academy OIC in Minneapolis, has a long history in the community development field. His resume includes serving as the executive director of Minneapolis’ West Bank CDC and Duluth’s Neighborhood Housing Services. Garnett replaces Steve Johnson (CFO of Danny’s Construction Co.) as one of three board members representing the metro area.
Admin budget higher with new staff
Deputy Commissioner Barb Sporlein informed the board of the Agency’s 2015 administrative budget. The budget of $30.5 million is up 8.6% over 2014. The budgeted staff complement of 237.5 FTEs increased by 6.5 over 2014. This increased staffing will help the Agency achieve its program objectives, such as deploying the $100 million in housing infrastructure and general obligation bond proceeds awarded by the legislature in 2014 and doubling the volume of multifamily first mortgages financed by the Agency. Sporlein said that the 3.6% ratio of administrative costs to program assistance is low and consistent with recent years.