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At the Minnesota Housing Finance Agency August board meeting, the board approved distribution of rehab rental loans and housing counseling awards. The board also examined drafts of the Affordable Housing Plan in anticipation of adopting the plan in its September meeting. In addition to receiving other updates, board members asked several questions, including one about meeting the housing needs of seniors.

Rental Rehab Loan Pilot and Housing Counseling Awards Made

At this meeting, the board approved three awards, totaling $849,000, for the Agency's Rental Rehab Deferred Loan pilot. Through this program, the Agency provides more flexible dollars for smaller rental developments in rural communities that would otherwise not score competitively under the Agency's annual RFP. From an evaluation of this pilot, staff expects to develop recommendations for a permanent program for board approval by Spring 2015. Some changes might yet be made if adopted as a permanent program, such as lowering the minimum size of an allowed development (currently 12 units). Agency staff said more work is needed to promote this unique program.

Thirty-nine nonprofit and public agencies will also receive a total $1.5 million to support their housing counseling programs. Greater Minnesota Housing Fund and Family Housing Fund also contributed to the counseling funding pool (the HECAT program). All agencies applying for funds received an award, typically at an amount less than that requested. Ten of the funded agencies primarily serve emerging markets, with three such agencies added this year (African Economic Development Solutions, Northside Residents Redevelopment Council, and White Earth Investment Initiative). The HECAT awards support foreclosure counseling (35% of funding awarded), homebuyer education (33%), homebuyer counseling (28%), and home equity conversion counseling (4%).

Drafting the Affordable Housing Plan

Commissioner Tingerthal informed the board that the Housing Committee of Minnesota's House of Representatives, for the first time ever, held a hearing to review the Agency's draft Affordable Housing Plan.

John Patterson, Director of Planning, Analysis & Evaluation, presented the draft of the 2015 Affordable Housing Plan. This is the Agency's "business plan," laying out funding priorities for the year running from October 1, 2014 through September 2015. Fueled by housing market improvements and new bonding funding, $947 million will be awarded in 2015, the Agency's largest one-year spending plan in its history. Staff estimates 68,000 households will be served in 2015. Upon hearing the presentation, board member Gloria Bostrom looked for reassurance that the Agency would be doing something different to promote homeownership than what was occurring leading up to the foreclosure crisis. Assistant Commissioner Mike Haley responded that the Agency's goal was to provide successful homeownership, not just more homeowners. Haley also pointed to the Agency's requirement that housing counseling be tied to its mortgage programs.

The public comment period on the 2015 AHP ended August 29, and the Board is expected to adopt the plan after considering any amendments at its September 25 meeting.

Other updates

In her opening remarks, Commissioner Tingerthal stated that the Agency would be undergoing a periodic review of its financial accounts, with results due in March 2015. The Agency uses this study to figure out what portion of its funds need to be reserved as security for bonds and how much can be freed up for program use.

A homeownership program of the Lower Sioux is being reshaped. The board approved a change from the program's originally approved modular housing design to a stick built housing unit because the modular design did not meet the Agency's green criteria. Four homes are being built by the tribe with Agency financing.

Board Chair Johnson asked about market acceptance of Mortgage Credit Certificates (MCCs) provided by the Agency. The response was that few were accessing the certificates. However, the Agency's lending partners like the loan program. The certificates tend to be more popular with higher income homebuyers, who are not the Agency's target population. (Read more about the MCC program in this blog post.)

Future directions

Board member Stephanie Klinzing asked about how the Agency could serve seniors. Staff responded that it was now teaming with the Department of Human Service and Maxfield Research to better understand the various needs of the state's growing senior populations. Tingerthal added that housing for low income seniors will take "prominent place" in the Agency's next strategic plan.