Affordable Housing Aid Program for Local Governments Heard in House

March 21, 2022

The bill would provide $100 million annually to local governments to address local housing needs.

The House Taxes Committee on March 15 took up HF 3982, a bill that would provide annual formula-based aid directly to cities to support affordable housing efforts.

The bill, authored by Rep. Michael Howard (DFL-Richfield), was laid over for possible inclusion in the House omnibus tax bill. The Senate companion, SF 3779 (Sen. Kari Dziedzic, DFL-Minneapolis), is awaiting action by the Senate Taxes Committee.

Aid amounts

As amended by the A1 amendment, HF 3982 would provide $20 million in affordable housing aid to cities above 10,000 in population, a $10 million set-aside for cities below 10,000 in population, and $70 million for counties.

Cities above 10,000 in population and counties would receive direct funding from the program based on each local government’s share of cost-burdened households paying more than 30% percent of income for housing.

As a part of the A1 amendment that the League helped develop, cities below 10,000 in population would be able to access a $10 million pot of money to receive grants of at least $25,000 from Minnesota Housing.

Other parameters in the amendment adopted by the committee include:

  • Requiring counties to work directly with cities on qualified projects located in cities.
  • Allowing cities to transfer unused funds to a local housing trust fund if a qualified project is not able to be executed within the time frame the funds must be spent.

Qualifying projects

Projects that the funds could be used for must:

  • Assist families at or below 115% of the greater of state or area median income for homeownership projects, or
  • Assist families at or below 80% of the greater of state or area median income for rental properties.

These requirements mirror those of the Economic Development and Challenge Fund Grant Program.

Projects could include construction, acquisition, rehabilitation, demolition, or removal of existing structures; construction financing; permanent financing; interest rate reduction; refinancing; and gap financing of housing to provide affordable housing to qualifying households.

City testimony

St. Peter City Administrator Todd Prafke, who testified in support of the bill on behalf of the League, noted that direct flexible aid would bolster local efforts that seek to address the construction, acquisition, and rehabilitation of housing across the housing spectrum.

Other testifiers in support of the bill were Anne Mavity, of the Minnesota Housing Partnership, Roseau County Commissioner Jack Swanson, and Olmstead County Commissioner Sheila Kiscaden.

Watch a recording of the committee hearing

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