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MN’s housing needs outstrip public funding

Karlee Weinmann//February 5, 2016

MN’s housing needs outstrip public funding

Karlee Weinmann//February 5, 2016

Gov. Mark Dayton this year carved out a $90 million chunk of his bonding proposal to support affordable and workforce housing projects, but as legislators warm up to housing issues, more than 150 developers and advocates are calling for a beefier plan.

They widely lauded the governor’s emphasis on housing issues, but the organizations – which banded together a few years ago as the Homes for All coalition – say needs that outmatch available resources justify a bigger buy-in from the state.

The group wants $130 million in total funding, more than the record $100 million approved in 2014. The increase would free up funding specifically for in-demand senior housing projects that have historically struggled to cobble together financing.

“We have some demonstrated, proven programs that are succeeding,” said Rose Teng, a policy analyst at the Metropolitan Consortium of Community Developers and spokesperson for the coalition. “$130 million would be a really strong investment for long-lasting housing solutions.”

Still, critics of Dayton’s $1.4 billion overall bonding request have said they’ll fight to reduce the funding package. Several Republicans in the House and Senate had said they hoped for a bonding proposal valued between $800 and $850 million, and will push to scale it down.

With about a month left to go before the session kicks off, it’s unclear which of the governor’s funding priorities could end up on the chopping block. His bonding pitch also designates substantial resources for water infrastructure improvements, higher education and historic preservation.

Despite growing bipartisan support for affordable housing, any squabbling over funding threatens to restrict badly needed dollars, said Warren Hanson, president and CEO of the Greater Minnesota Housing Fund.

“It’s a very nominal part of the budget and it has a huge human and economic impact. It has the ability in many cases to literally save lives and help our business community,” he said. Other parts of the bonding bill with bigger price tags could provide cost-cutting opportunities, he added.

Dayton’s existing pitch also sets aside $12 million to add 200 permanent housing units at the Dorothy Day Center, a high-traffic St. Paul shelter run by Catholic Charities that offers health services and job training. The proposal includes another $20 million to upgrade languishing public housing complexes.

The $90 million chunk for housing development is enough to help 2,500 households, according to the governor’s office. The campaign for more funding hinges on convincing legislators that the demand for affordable units – and the upside they carry – is real.

Back-of-the-napkin math shows an extra $40 million could reach roughly 1,100 more households, helping to address low vacancy rates in the Twin Cities, a clamor for workforce housing in greater Minnesota and a renewed push to end homelessness.

“That squeeze in the housing stock and the affordability of housing really affects the entire spectrum of Minnesotans, not just homeless people or not just workers,” said Mary Tingerthal, commissioner of the Minnesota Housing Finance Agency, the state’s housing branch.

State funding is the cornerstone of affordable and workforce housing development around the state. Especially as federal resources dry up and demand for those units ticks up, developers lean on the state agency to bridge gaps left between philanthropic and other funding tools. Federal programs that promote senior housing and offer rent subsidies have seen deep cuts in recent years, and Congress has also restricted funds available for new affordable units.

Last year, the Minnesota Housing agency doled out $92.4 million to projects statewide. The funding propped up projects that plan to create or preserve a combined 1,420 single- and multifamily units, targeting an array of groups including low-income families and homeless youth, among others.

Minnesota Housing is a hub for virtually all affordable housing projects in the state. The agency provides a vital link between developers and financing they need for capital-intensive projects facing stiff competition for limited outside funding.

“Without the state, almost none of us do anything in affordable housing,” said Alan Arthur, president and CEO of Minneapolis-based affordable housing developer Aeon. “The state is absolutely critical. Without the state funding and the state housing programs, very, very little would get done.”

While housing advocates across the state have already joined forces to ask for more funding, they say Dayton’s existing proposal sends a strong message. By weaving significant housing dollars into the bonding bill, he reinforces the idea that housing is a pivotal part of the state’s infrastructure.

During the past half-decade or so, lawmakers have increasingly tuned into housing issues – particularly in greater Minnesota, where many businesses say they can’t grow without more housing to accommodate new workers.

Efforts to boost housing complement workforce development programs, Hanson said. Particularly in greater Minnesota, they work in tandem to stoke growth in vibrant local economies anchored by healthy businesses that need trained workers, and places for them to live, in order to grow.

Several companies, including Polaris and Barrel O’ Fun snacks, have complained in recent years that the only thing keeping them from expanding in northern Minnesota is a dearth of accessible housing options for new workers. Towns like Perham, whose 4,000-plus jobs outmatch its 3,000 residents, showcase the strain.

State Rep. Pat Garofalo, R-Farmington, who heads the House Job Growth and Energy Affordability Policy and Finance Committee, said last year that a lack of housing for workers was nearing a crisis point. Along with the pressing need, Dayton’s commitment to the cause guarantees further discussions this session.

“We ought to look at [housing] that way – not only at the state level, but at the county level, the city level and the local level,” Arthur said. “We’ve got to be looking at it as important as roads, streets, parks and schools.”

It’s a policy position that builds on a budding legacy of local, regional and state planning that considers affordable housing. Still, on its own, the bonding request doesn’t come close to buoying enough projects to accommodate demand.

Aeon, for example, received interest from more than 1,000 people for just 47 units that opened recently, Arthur said. On a broader level, requests for state financing last year tripled the funding available – and the pool is virtually always oversubscribed.

For now, housing advocates say they’re encouraged by an increasingly open dialogue on housing issues.

The governor’s latest proposal doesn’t specify how many housing dollars would funnel into the Twin Cities area versus greater Minnesota – that’ll be up to Minnesota Housing, which last year funneled $75 million into outstate projects compared with $17.2 million in the seven-county metro.

Beyond supporting individual projects, state housing funding underpins a plan unveiled last week to end homelessness in Minnesota. About a dozen agencies signed onto a framework that aims to house all homeless veterans this year and get families off the streets by 2020.

Without the funding included in Dayton’s bonding proposal, Tingerthal said, that won’t happen. The plan calls in part for the construction of 5,000 affordable units statewide over the next five years.

“We know that we actually have to add units to the housing stock in order for there to be units available,” Tingerthal said. “It’s very difficult to end homelessness without giving a person a home.”

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