Workforce Housing Bills Making Progress at the Capitol

Several League-supported workforce housing bills had hearings last week.
(Published Mar 27, 2017)

The League-supported workforce housing tax increment financing (TIF) bill was heard in the Senate Taxes Committee and included in the House omnibus tax bill last week.

The proposed Senate jobs omnibus bill includes $1 million in additional funding to the DEED Workforce Housing Grant Program. Meanwhile, the proposed House jobs omnibus bill moves the program to the Minnesota Housing Finance Agency (MHFA). Providing more tools for cities dealing with workforce housing shortages is one of the League’s 15 legislative priorities.

Workforce housing TIF
The bill, HF 1178 (Rep. Paul Anderson, R-Starbuck) and SF 1168 (Rep. Mark Johnson, R-East Grand Forks), would allow cities to use a new TIF for market-rate rental housing. The bill aims to provide cities some assistance in the appraisal gap that is often experienced when a developer of market-rate housing in Greater Minnesota is considering building apartments.

Cities eligible for the proposed workforce housing TIF authority must:

  • Be outside of the seven-county metropolitan area.
  • Have an average vacancy rate for rental housing within the city or any city within 15 miles or less of 3 percent or less for the past two years.
  • Have at least one business located within 15 miles that has 20 or more full-time employees that states in writing that the lack of housing has impeded their ability to hire workers

The workforce housing TIF would be an additional authorized use under the current economic development TIF authority, with the duration being eight years after the district is certified. The bill also allows the higher income limits under the MHFA challenge program to be used for housing TIF districts, if the project receives an MHFA grant from the program.

SF 1168 was heard by the Senate Taxes Committee on March 22. The bill was laid over for possible inclusion in the Senate omnibus tax bill, which may be released this week. Shannon Stassen, Crookston city administrator, testified in support of the bill, along with staff from the League and the Minnesota Chamber of Commerce.

HF 1178 was included in the House omnibus tax bill (HF 4, Rep. Greg Davids, R-Preston). (Read related Bulletin article.)

Workforce housing DEED grant program
The League was successful in securing funding for the Department of Employment and Economic Development (DEED) workforce housing grant program in 2015. The program is currently funded at $2 million each year in ongoing funding and has been successful in providing assistance to cities in the past two years.

The Senate omnibus jobs bill (SF 1937, Sen. Jeremy Miller, R-Winona) includes an additional $1 million in funding to the DEED grant program for FY 2018-2019.

The House omnibus jobs and energy affordability bill (HF 2209, Rep. Pat Garofalo, R-Farmington) moves the Workforce Housing Grant Program from DEED to MHFA and provides one-time funding of $4 million each year for FY 2018-2019.

After the full House and Senate vote on their respective omnibus jobs bills, the differences between the two bills will likely be compared and negotiated in a conference committee.

Workforce housing investor tax credits
HF 1020 (Rep. Rod Hamilton, R-Mountain Lake) and SF 785 (Sen. Mike Goggin, R-Red Wing) would give investors of workforce housing a 40 percent state tax credit (up to $1 million) for contributions toward eligible rental workforce housing. A project must also have at least 50 percent non-state matching funds to be eligible.

SF 785 was heard and amended in the Senate Taxes Committee on March 22. The bill was laid over for possible inclusion in the Senate omnibus tax bill. The last hearing for HF 1020 was on Feb. 15 in the House Job Growth and Energy Affordability Policy and Finance Committee.

We need your help
Cities experiencing a shortage of housing for potential expanding businesses should contact League staff to share your city’s story and discuss how the legislation could assist your community.

Cities are also strongly encouraged to share those stories with legislators, especially if they are on the House or Senate Taxes committees. You can encourage your members to sign on as co-authors to the legislation while it awaits a hearing.

For more background information about this topic, read a previous Bulletin article.

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