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.

$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.