Focus on New Laws: New Workforce Housing Tools

The revised Workforce Housing Grant Program and new tax increment financing authority are now available for cities.
(Published Sep 25, 2017)

The League advocated for continued funding of the Workforce Housing Grant Program, a new tax increment financing (TIF) authority for workforce housing, and a tax credit program for workforce housing during the 2017 legislative session. Continued funding for the grant program, with some changes, and the TIF authority were secured.

Establishing tools for cities to use to develop workforce housing has been a League legislative priority for the past several years. These efforts focused on communities that had dramatic market-rate housing shortages despite a growing job market, and employers who want to expand. In previous sessions, a successful pilot program led to the statewide grant program now established through the Department of Employment and Economic Development (DEED).

The League would like to thank all the cities who helped advocate on these tools during the session, including city staff from Crookston and Melrose.

Grant program
Changes and continued funding for the Workforce Housing Development Program were included in the omnibus jobs bill (Chapter 94) during the 2017 legislative session. Two million dollars each year in ongoing funding was secured for the direct development of market-rate residential rental properties to increase the availability of rental housing in Greater Minnesota. This program was previously administered by DEED and is now administered by MHFA.

The qualifications (listed in subdivision 4 of Minnesota Statutes, section 462A.39) for the MHFA program are very similar to those from the original DEED program. One change is that there is now a preference among applications to cities with populations under 30,000. The program previously gave preference to cities with populations under 18,000.

Applications are due Thursday, Jan. 25, 2018. MHFA expects to make recommendations to their Board in March 2018. Sign up for MHFA’s eNews to receive timely updates. For more information, contact Katie Moore at (651) 296-6354.

New economic development TIF for workforce housing
Workforce housing TIF authority was in the special session tax bill of 2017 (Minnesota Statutes, section 469.174- 469.176). In addition to existing economic development TIF requirements, cities using the workforce housing TIF tool shall make the following findings and set forth in writing the reasons and supporting facts for each determination:

  1. The city is located outside of the metropolitan area, as defined in Minnesota Statutes, section 473.121, subd. 2.
  2. The average vacancy rate for rental housing located in the municipality and in any statutory or home rule charter city located within 15 miles or less of the boundaries of the municipality has been 3 percent or less for at least the immediately preceding two-year period.
  3. At least one business located in the municipality or within 15 miles of the municipality that employs a minimum of 20 full-time equivalent employees in aggregate has provided a written statement to the municipality indicating that the lack of available rental housing has impeded the ability of the business to recruit and hire employees.
  4. The municipality and the development authority intend to use increments from the district for the development of rental housing to serve employees of businesses located in the municipality or surrounding area.

Two changes were passed into law that differed from the League’s original proposal:

  1. The county board and school district must approve the TIF plan by resolution before it qualifies as a workforce housing TIF.
  2. A 10-year sunset that declares no future requests for workforce housing TIF certification may be made by a county auditor for requests made after June 30, 2027.

2017 Law Summaries
Read about these tools and other housing law changes, including the local housing trust fund, on page 13 of the 2017 Law Summaries (pdf).

Share your experience
If your city is considering applying for the grant program or using the TIF program, please share your city story with League staff member Heather Corcoran at hcorcoran@lmc.org. City experiences help inform future legislative efforts around these programs.

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