New report examines Economic Development and Housing Challenge Program

On February 8, the Office of the Legislative Auditor (OLA) released a report on the Economic Development and Housing Challenge (EDHC) Program, administered by Minnesota Housing (MHFA). 

EDHC provides grant or loan funding for affordable rental housing developments that support economic development activities. Funds provide support for acquisition, rehabilitation, or new construction of permanent rental housing, with a minimum of four units. The Legislature appropriated an average of $9.3 million in base funding to the program each year between fiscal years 2012 and 2019.

The Legislative Auditor found that the agency has generally done a good job of administering the program. It included these recommendations: 

  • The Legislature should review EDHC program statutes to determine whether the program’s broad purpose and flexibility accurately reflect legislative priorities. 
  • MHFA should increase its efforts to work with stakeholders to streamline its application processes for EDHC funds. 
  • MHFA should review EDHC rules to determine whether they are clear and contribute to an efficient and effective award process. 

In a response from Minnesota Housing to the report, Commissioner Jennifer Ho wrote that she appreciated OLA’s “insights and recommendations to improve the program.” She noted that Minnesota needs more affordable housing and that “demand exceeds funding” for the Challenge program. As MHP has noted previously, the Challenge Program is highly oversubscribed, with approximately three to four applicants for every successful award of funds. 

Read the OLA report.