The August Minnesota Housing board meeting began with a primer on the state’s homeless situation. The board officially adopted the Agency’s rental development cost control model and received updates on the Agency’s spending plan for 2016. The notes below also report on the special committee meeting of the board where comments on the Agency’s spending plan were reviewed and with the committee deciding on the distribution of federal housing tax credits.
Point in Time Homelessness Survey
Cathy ten Broeke, State Director to Prevent and End Homelessness, opened the meeting by providing the board an overview of the most recent Point in Time survey of homeless people. This survey is required by HUD to be undertaken each January. ten Broeke said that the annual survey complements Wilder Foundation’s tri-annual interviews of homeless people. ten Broeke was happy to report that the state’s homeless population dropped by 10% compared to the previous year. Most of this decline stemmed from a reduction in the number of homeless families she said. ten Broeke also said that the state’s number of homeless veterans had declined by 50% over the past five years – she attributed this to federal rent subsidies for veterans and the ability to leverage state human services funding for this population. The drop in homeless families was connected to the improvement in the economy (more jobs), Minnesota’s rapid rehousing programs, and a targeted initiative toward those families, mostly young parents, who are most likely to re-enter the shelter system. This December, ten Broeke will propose to the Interagency Council on Homelessness an action plan to implement the next phase of the state’s effort to prevent and end homelessness.
Predictive Cost Model Resolution
The board passed a resolution to formally adopt the Agency’s predictive cost model. The practice of bringing to the board’s attention any project recommendations that exceed 25% of the model’s predicted cost has been the unwritten policy of the agency for the past seven years said John Patterson, Director of Planning, Research, and Evaluation. Member Gloria Bostrom asked why 25% was the threshold for the model, stating it seems to be a high percentage for a threshold. Patterson responded that a survey of project costs showed about one-fifth of projects funded by the agency exceeded the 25% threshold. The Agency didn’t want program staff to spend the extra time researching costs on more than this number of applications, Patterson said. The model has been proven to accurately predict about 60-70% of project costs. Patterson added that next month the Agency will receive a report on cost containment. This report will look at the impact of the array of Agency initiatives to control project costs, including use of the predictive cost model.
2016 Affordable Housing Plan
John Patterson provided an overview of the proposed 2016 Affordable Housing Plan (AHP). The Agency’s annual spending plan comes in at $961 million for 2016. Only falling below the 2015 plan, it is the second biggest in Agency history said Patterson. Board members then focused remarks on the Agency’s efforts to address racially-based disparities in homeownership. Member Craig Klausing called this an important and exciting opportunity. Commissioner Tingerthal said downpayment assistance is key to the Agency achieving its goal that 27% of mortgages go to households of color. Tingerthal added that this goal was based on the analysis of data concerning current renters that have incomes that will support home purchases, 25% of whom are households are of color.
Also in the proposed AHP, the Agency will make a $42 million commitment to prevent and end homelessness. In response to a board member question about why some homeless programs had lower funding levels than in 2015, Tingerthal said that the Agency has shifted funds among homeless programs as it has gotten away from funding homeless projects that require ongoing operating subsidies. Also, 600 homeless units funded last year through programs that have a lower funding level in the new AHP are just beginning to start construction. The board will vote on the AHP at its September meeting.
Committee of the Whole Meeting - August 31st:
At a committee meeting for the entire board (titled the Program and Policy Meeting) on August 31, board members reviewed comments made on the Affordable Housing Plan (AHP) and took up the issue of distribution of the state’s housing tax credits among suballocators and the Agency.
Submitted Comments on AHP
Regarding the AHP, Agency staff reported that 11 organizations had submitted comments on the draft housing plan. Overall, staff said, the comments were supportive of the direction and priorities laid out in the Agency’s plan.
One of the more consistent requests by commenters was for more details on the Agency’s plan for a renter senior housing pilot. Staff said in the next month they will seek input on the pilot from groups interested in senior housing. The staff’s goal is to fund one pilot project by the end of the coming program year.
Staff said that they did not recommend any changes to the spending plan included in the AHP but would make several clarifications based on comments. For instance, in response to the interest in mixed-income housing, staff said that will state that they will continue to be on the lookout for good funding models. In response to a comment asking for state matches for locally raised money committed to housing, the AHP will clarify the Agency’s practice of giving priority to projects with local funding. A commenter’s request for greater commitment to fair housing was answered by staff’s statement that fair housing principles are embedded in everything that the Agency does.
Member Bostrom said that she was happy to see commenters focus on the Greater MN targeted Rental Rehab Deferred Loan program. Commissioner Tingerthal said that the Agency would consider comments as they move forward with program changes adopted earlier in the year. Tingerthal added that getting funds to preserve 1-4 unit properties, one of the program’s priorities, was challenging due to a low tolerance for compliance measures among owners of these properties. The Agency, she said, had dialed back compliance requirements as far as it could.
Board member George Garnett brought up the issue of project cost. He said that it takes too long to assemble funding packages; the Agency needs to “light a fire under this problem.” Tingerthal responded that staff will report on cost containment measures at the September meeting. On another topic, Garnett said that the current approach to counseling does not deliver the results he would want to see for increasing minority home ownership. Tingerthal responded that the Agency’s enhanced counseling program is recording household of color participation above 90%, though the results in terms of home purchase will not be seen for several years. Staff and board members then discussed the challenges facing nontraditional lenders in light of new federal mortgage requirements.
Tax Credit Allocations
In the second item before the committee, the board revisited tax credit allocations. Staff said that they found no compelling reason to change the existing formula which gives equal weight to demographic and cost burden ratios. Staff further added that there are big changes now occurring in the location of poverty; so that they don’t want to double the weighting for the factor related to cost burden households at this time. The staff again proposed what they proposed earlier: keep the existing formula but update the allocations based on current demographic data. Tingerthal added that a major concern of the central cities (who stood to lose the most credits) was that the change would hurt projects now being reviewed; in response the Agency agreed to postpone implementation of the change by a year. Garnett said that he was concerned that this proposal took resources away from where they would be used to benefit people and direct them to communities that did not want affordable housing. Tingerthal responded that the 10 percent nonprofit set aside for housing tax credits and the use of housing infrastructure bonds both added to the revenues being used in the central cities. Board members then voted in favor of the staff’s proposal with Garnett opposing. A final vote is expected on the plan at the regular September board meeting.
Commissioner Tingerthal closed the meeting by announcing that Jessica Deegan, now in the planning, research and evaluation department, would be the replacement for the retiring Director of Federal Affairs, Jim Cegla.