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This analysis of the governor's budget was created by MHP Deputy Policy Director Libby Murphy.

On Tuesday, Jan. 26, Governor Tim Walz released his FY22-23 budget proposal. The proposal includes $100 million in Housing Infrastructure Bonds and $14 million in one-time appropriations.

Proposed One-Time Funding  

 

 

Program

Proposed Base Budget Increase

Households served or homes built FY22-23

Family Homeless Prevention (FHPAP)

$4M

2,000 households

Challenge Program

$4M

60-100 new homes

Homeownership Assistance Fund

$1.5M

175 households

Homework Starts with Home

$1M

185 families

Workforce and Affordable Housing

$1.5M

40-50 households

Manufactured Housing Infrastructure Funding

$1M

 

Homeownership Education, Counseling, and Training (HECAT)

$.5M

2,500 households

Bridges Rental Assistance

$.5M

70 households

Total

$14M

 

 

Proposed Transfers

 

 

Transfer From

Transfer To

Amount

Rental Rehab Deferred Loan

Workforce Housing Development Program

$2M ONE TIME


$100 million Housing Infrastructure Bonds (HIBS)

HIBS are the largest state source of development resources and can be used for a variety of eligible uses, including new construction and preservation of housing that serves some of Minnesota’s lowest income and most under-resourced households.

$4 million Family Homeless Prevention and Assistance Program (FHPAP)

(FHPAP) assists families who are homeless or at imminent risk of homelessness. FHPAP has successfully prevented homelessness, minimized the periods of homelessness, eliminated repeat episodes of homelessness.  Current funding levels only serve about two-thirds of those eligible to receive FHPAP assistance. Last RFP, MH had more than $4M in requests that were not able to be funded.

$4 million Challenge Fund

New housing construction has not kept pace with household growth. In MN today, the statewide rental vacancy rate is between 4%-6% and there is a less than five-month supply of homes for sale. These conditions limit options for families. The development of new housing is critical for economic growth and job creation. The proposal will produce more new workforce housing opportunities.

$1.5 million Homeownership Assistance Fund

A lack of wealth available for entry costs contributes to the homeownership gap between white and Black, Indigenous and People of Color (BIPOC) households. Many households have the income to make monthly mortgage payments but lack the wealth necessary for a down payment or closing costs. The Homeownership Assistance Fund helps moderate-income households become successful homeowners through down payment and closing cost assistance.

$1 million Homework Starts with Home

 On October 1, 2019 there were 9, 060 students experiencing homelessness who were enrolled in Minnesota schools. Homework Starts with Home provides rent and other housing assistance to families with school-aged children that lack housing stability.

$1.5 million Workforce and Affordable Homeownership Program

In addition to structural and institutional barriers, one of the reasons for this racial homeownership gap in Minnesota is due to the lack of affordable homeownership opportunities. Multiple dynamics create a greater need for new affordable opportunities that are within reach for first-time, along with low- and moderate- income buyers. The Workforce and Affordable Homeownership Program provides competitive grants to increase the supply of workforce and affordable homeownership opportunities.

$1 million Manufactured Housing Park Infrastructure Funding

Minnesota Housing has resources to support the preservation and improvements of manufactured home, as well as the purchase of new homes, but lack on-going resources to finance infrastructure improvements of the parks.  This fund provides infrastructure improvements including streets, sewer and water and lighting.

$500,000 Homeownership Education, Counseling and Training (HECAT)

Given the economic impacts of the pandemic, Minnesota Housing anticipates that many homeowners will need foreclosure counseling. Preventing displacement is critical to supporting communities and homeowners.

$500,000 Bridges Rental Assistance

The Bridges program supports people with serious mental illness and allows them to live, work and learn in the most integrated settings in their communities. The proposed funding will reduce the current waiting list.

In addition to new proposed funding, Governor Walz’ budget proposes a one-time transfer of $2 million from the Rental Rehab Development Program to the Workforce Housing Development Program.  Minnesota Housing’s rational for the transfer is that the pace of new housing construction is not keeping pace with household growth, which could impede economic growth and job creation. The Workforce Housing Development Program funds new rental housing options and is available exclusively to smaller to mid-size communities in Greater Minnesota – communities that do not typically receive funding from other new construction programs. The program has no income limits and prioritizes applications with the highest percentage of market rate units. 

After the transfer, the RRDL program will still have $5.5M for the next biennium. Last year with the RRDL program, Minnesota Housing partnered with USDA to rehab 21 projects (544 units).

MHP applauds Governor Walz for these investments in housing. These investments speak to the broad number of challenges impacting families, including housing stability and paths to homeownership. With these investments, Minnesota can expand access and opportunity by producing desperately needed homes, preserve and improve the homes we have, and prevent displacement and homelessness by supporting under-resourced renters.

This session, MHP will use its resources and network to advocate lawmakers to increase investments in housing stability by adequately funding emergency and ongoing housing assistance programs; investing in programs that preserve existing affordable homes and add new units; and strengthening laws to support renters access affordable housing.

Housing Stability

The COVID pandemic has exacerbated many households’ housings cost burden. Families who were already struggling to afford housing have found themselves’ in greater jeopardy of experiencing homelessness. Throughout the pandemic, we’ve seen the impact that interventions like emergency housing assistance have had in keeping people in their homes. MHP fought hard to secure $100 million in COVID Housing Assistance Program (CHAP) funds.  While the Federal government just invested $25 billion in rental assistance, we know the Minnesota Legislature has a role to play in helping households that will not qualify under the Federal program.

The Solutions

  • Emergency Housing Assistance. MHP is working with State lawmakers to understand gaps in assistance provided by the latest round of Federal relief. We support additional investments to renters and homeowners to pay rents, mortgages, insurance payments, HOA fees, utilities and other housing related costs.
  • Eviction Moratorium. MHP believes safe, stable and affordable housing is critical to public health. Therefore, MHP continues to support efforts to ensure every Minnesotan has a home in which they can safely adhere to government restrictions and recommendations. Additionally, MHP recognizes that Minnesotans experiencing job or income loss did so due to no fault of their own.  The eviction moratorium, coupled with housing assistance has proven to keep households healthy and support students. In fact, research increasingly shows that areas with moratoriums have lower morbidity and mortality from COVID 19 than areas that do not. 
  • Bring it Home Campaign. The pandemic highlights the importance of comprehensive and permanent rental assistance program for all income qualifying Minnesotans. MHP supports this bold, visionary campaign.

 

  • Manufactured Home Park Opportunity to Purchase and NOAH Acquisition. MHP supports strategies to help affordable housing providers and residents acquire and preserve their homes. An Opportunity to Purchase law for manufactured home parks will help residents of parks purchase and convert their parks into cooperatively owned entities.  Displacement caused by the loss of Naturally Occurring Affordable Housing has devastating and long-term consequences for households. Acquisition funds to help purchase, preserve the affordability, and improve the quality of these homes is critical to ending alarming trends in displacement.

Preserving the Homes We Have and Creating New Opportunities

MHP continues to prioritize preservation and production. Annually, Minnesota continues to lose more affordable housing than it creates. Households below 50 percent of area median income are most impacted by displacement. And, the market produces the fewest new units for households at these incomes. Households struggling to find affordable housing often settle for poor quality housing and experience the highest rates of cost burden, overcrowding, evictions, and episodes of homelessness. Black, Indigenous, and People of Color households are disproportionately impacted by the inadequate stock of truly affordable homes.

The Solutions

  • Local Housing Trust Funds. MHP continues to advocate for the one-time appropriation of state matching funds to incentivize local communities to establish and dedicate funds into affordable housing trust funds. These powerful local tools were endorsed in the 2018 Governor’s Housing Task Force report and Governor Walz’ FY20-21 budget.
  • 4d. MHP believes that by simplifying and reducing the classification rate for affordable housing properties, the State  can help housing providers reinvest in existing properties and better leverage private equity to produce more homes or better leverage state resources to create more deeply affordable units. This change will help preserve existing affordable housing stock by lessening the economic pressures that currently drive the conversion of many affordable units into market-rate status.
  • Bonding. Bonds are Minnesota’s single greatest tool to create the most deeply affordable units. MHP will continue to work in coalition with Homes for All to secure additional bonding resources.

  • Tax Credit Contribution Fund. MHP continues to advocate for a state affordable housing tax credit. The Minnesota Legislature must do more to incentivize the donation of cash, land and property to support preservation and new production. Adding land and property donations to our cash donation credit proposal will help preserve or repurpose distressed assets into affordable homes.

Improving Access and Opportunity

Low-income renters face a variety of challenges to securing safe, decent and affordable housing. Households with non-traditional incomes like Section 8 vouchers or other forms of housing assistance many times struggle to utilize their assistance because some landlords refuse to accept it. Often the denial of housing based on income serves as a pretext for discrimination, disproportionately affecting renters of color, women and persons with disabilities.

The Solutions:

  • Prohibit Source of Income Discrimination. Minnesota needs to amend its Human Rights Act to clarify that housing discrimination based on a person’s source of income is illegal.
  • Eviction Expungement Reform. Reforming Minnesota’s eviction reporting and expungement laws would give tenants opportunities to remedy their situations before an eviction is recorded and more easily secure an expungement, especially in cases of dismal or in cases where an eviction is not a reasonable predictor of future tenant behavior.

Download and view the 2021 Policy Agenda factsheet here.  

 

 

Minnesota Housing Partnership (MHP) has received a crucial grant to assist rural and Native leaders in solving housing and community development issues in their communities. The U.S. Department of Housing and Urban Development’s Rural Capacity Building for Community Development and Affordable Housing Grant program (RCB) will provide $2.4 million to continue MHP’s important technical assistance and capacity-building work. 

The award will fund MHP’s Strengthening Rural Communities (SRC) program, which gives leaders the tools and knowledge they need to identify and address regional development needs through strategic collaboration. 

In rural and Native communities nationwide, there’s a significant gap between the supply of affordable housing and the number of people who need it, and a pressing need to address community development challenges. Providing resources and guidance to local and Tribal governments and other rural housing development organizations has proven an effective model of helping local communities address these needs.

“Minnesota Housing Partnership is ready to put this funding to work immediately in rural and tribal communities,” said Anne Mavity, MHP’s executive director. “We are thrilled that the Department of Housing and Urban Development has committed these funds to help our communities thrive.”

MHP has used past awards to provide technical assistance to rural communities in 17 states, including 20 Native nations. Past funding has resulted in hundreds of new and preserved units of affordable housing, and dozens of community and economic development projects in communities that need it most.

"MHP helped Lower Sioux’s Planning & Grants Department identify a new funder for an upcoming rental construction project. They then sat down with us to teach us how to complete the intensive 15-year feasibility projections and they reviewed our proposal draft," said Nora Murphy, Tribal Planner and Grant Writer for the Lower Sioux Indian Community. "In the end, we were awarded two grants to build 10 new rental homes at Lower Sioux. We simply couldn’t have done it without MHP’s guidance. Many, many thanks!"

Funds will be awarded to eligible entities through a Request for Technical Assistance process that will be announced in the next few weeks and that will be posted here.

A new report by MHP describes important affordable rural rental properties across Minnesota and the people who live there.  

In communities across Greater Minnesota, rural rental housing is at risk due to declining investment and failure to construct new housing affordable to community members. -- and MHP is working with partners and communities to save it (Learn more about our technical assistance here).  These are rental units that have been financed under the USDA’s Section 515 program. Under 515, nonprofit and for-profit entities have received 1 percent loans for acquisition, rehabilitation or construction of rental housing and related facilities. 

Many rural rental homes are aging and in poor condition. As federal investments in the 515 program have been insufficient and declining for many years, many 515 properties are in declining condition and there has been no new construction for years. 

As loans for these properties expire, more and more buildings are exiting the Section 515 program. Exiting properties may lose rental assistance funding, and some properties are no longer required to keep rents affordable — meaning residents could face displacement or homelessness. 

These properties are often the few rental homes in rural communities that are affordable to extremely low-income residents, seniors, and people with disabilities. The loss of these properties will be especially acute for communities already struggling to provide affordable homes. 

Part of the effort to save these properties is to quantify and describe these properties and who lives in them. MHP, in collaboration with the University of Minnesota’s Center for Urban and Regional Affairs, analyzed the most recently available data. The result is this report 

Among the findings:  

  • Minnesota has 456 properties under the 515 program providing 9,667 affordable rental units and housing 13,435 people.  
  • Average annual income for residents of these properties is $17,061.
  • These properties are found in 82 of Minnesota’s 87 counties but are concentrated in central and southern Minnesota.  
  • Significant age of the properties, indicating a need for regular maintenance and potentially poor conditions.
  • Households are more likely to be headed by women and are more likely to be BIPOC.