No special session: The implications for affordable housing

I was still somewhat bleary eyed when I wrote about the frantic, late-night close of the Minnesota legislative session back in May. Little did I know the back-and-forth behind closed doors would keep us holding our breath for another three months. Sadly, after more political smoke about a special session, the two sides weren’t able to strike a deal — snuffing a bonding bill that could have supported affordable housing development across the state.

So what happened? When the impasse over light rail killed the bonding bill in the final moments of the session, both Republicans and Democrats asked the Governor to call a special session to pass the critical measure that, among many other aspects, included $45 million for affordable housing. The Governor heeded the call — but with a long list of must-have that he’d need to see in the bonding bill to bring legislators back to St. Paul. Top of his list? Funding for the Southwest light rail.

As the summer heat sizzled, so did media speculation about the prospect of a special session. But, despite (or perhaps because of the) high political temperatures heading into the election year, the major barrier refused to thaw: Republicans said they wouldn’t agree to a deal with light rail funding in the bill and Democrats said they wouldn’t agree to a deal without it. To add to the intrigue, some speculated a deal rested on helping Speaker Daudt’s primary race.

Then something seemingly amazing happened. The Governor brought together the combination of bacon, lettuce and tomato to persuade Speaker Daudt. As the weeks passed, the Governor compromised on many of his demands and still negotiations were stalled. It wasn’t until he had the Speaker over for sandwiches in late August that a deal reportedly was brokered. Still no agreement on funding for light rail, but it seemed the special session was moving forward.

Then we waited.

And waited.

Policy people, like our team at MHP, watched for behind-the-scenes logistics as an indicator that the special session was a go, but those actions were minimal and didn’t point clearly toward the convening of the special session. Primary day came and went, with Speaker Daudt winning his race, and still nothing seemed to be moving.

It took another two weeks before leaders finally announced that they couldn’t reach a deal on light rail and there would be no special session after all. A summer of smoke, but no fire.

So what does that mean for affordable housing?

As my colleague, Libby Murphy, explains, the fact that Minnesota’s legislature didn’t pass a bonding bill this year has many consequences for housing. Last year, for every project that was awarded funding, two applications were left unfunded. That ratio will surely increase without a special session bonding bill.

Bonding is the primary resource to develop affordable housing with connected services critical to preventing and ending homelessness for Minnesota’s most vulnerable households. Without a bonding bill, resources to implement Minnesota’s primary strategy to end long-term homeless will be very limited.

For context: In 2014, the Legislature appropriated $100 million in bonds, and $90 million was awarded. That funding went to construct and rehab 1,239 units of single and multi-family housing, and preserve or maintain 2,438 units of public housing. This year, with no bonding bill, the Agency will award $4.5 million of previously uncommitted bond funding, dedicating all the remaining to supportive housing activities. With that, the Agency estimates it will only fund one project of less than 36 units.

While the Agency’s proposed 2017 budget is greater than its 2016 budget, production and rehabilitation of multifamily units will be stymied without bonds. Bond funding decreased by nearly $17 million, dropping from $22.5 million in 2015 to $5.9 million this year. Without the anticipated $90 million in bond funding, MHFA will draw from other program funds to help maintain multifamily rental construction and rehabilitation.