House sidelines housing, roiling advocates

Housing advocates on Thursday lashed out at Minnesota House Republicans for leaving housing funding out of their initial bonding proposal despite mounting need, one of several issues that eroded support for the ill-fated bill.

Representatives on both sides of the aisle voted down the legislation, 69-64, on Thursday. It needed 81 votes to pass.

The lack of housing dollars in the House’s $800 million bonding package contrasts with heftier proposals from Gov. Mark Dayton and the DFL-led Senate, which each included $90 million for affordable housing projects and preservation.

Without new funding this legislative session, the state would lose out on 50 affordable housing projects that could add 3,500 badly needed units to a strained housing stock, Minnesota Housing Finance Agency Commissioner Mary Tingerthal said.

Virtually all affordable housing developers rely on government money to make their projects viable. As federal dollars dwindle and market demand ticks up, the state’s funding pool is in sharper focus. Typically, developers’ requests in Minnesota triple the amount of state aid available in a given year.

“It’s easy to look at this within the bonding bill as a single line-item that looks pretty big, but it really is about those 50 projects that are scattered throughout almost as many communities across the state,” Tingerthal said.

House Republicans, focused on tax cuts and reduced spending, have said they want a stripped-down bonding bill. As transportation funding talks falter with just four days to go this session, money for roads and bridges found its way into their proposal.

“It was used to solve transportation problems not traditionally done in a bonding bill,” Rep. Alice Hausman, DFL-St. Paul, said. “Because there was an attempt to solve transportation issues, everything else got shorted or zeroed out entirely.”

Troubling trends in Minnesota’s housing market have in recent years built up bipartisan support for funding affordable rentals and preserving public housing. In 2014, the Legislature funneled a record $100 million into housing – but officials say that allocation, spearheaded by Hausman, is long gone.

Meanwhile, the strain is getting worse. Since 2000, renters’ incomes have declined by 12 percent while rent rates have jumped 7 percent. A tight housing market means vacancy rates hover below 3 percent in communities across Minnesota, well below the 5 percent rate considered normal.

Nearly 600,000 Minnesota households put more than 30 percent of their income toward housing, the threshold where rent is considered unaffordable, according to Minnesota Housing.

St. Paul-based CommonBond Communities develops, owns or manages thousands of affordable units throughout Minnesota. The organization currently serves 9,000 people, many of them children, but has 12,800 people on its waiting list for units, CEO Deidre Schmidt said.

Higher construction costs also complicated the project planning process, leaving developers hungry for state help to close bigger funding gaps.

“It’s an issue that was an issue in 2014, but not only has it not gone away, the demographics and economics are making it a continuing problem for more individuals,” Tingerthal said.

The $90 million proposed for housing by Dayton and the Senate includes $70 million for general affordable housing projects and $20 million for long-awaited upgrades to public housing complexes languishing as federal dollars dry up. The Senate bonding bill failed by one vote earlier this month.

Minnesota has about 20,000 public housing units. In many communities, the funding available for capital improvements and maintenance falls well short of the need, putting properties and their residents at risk.

“We often talk about asset preservation in higher education, but asset preservation in housing is critical,” Rep. Rick Hansen, DFL-South St. Paul, said. “If it’s a leaky roof, we’ve got to fix it – and we’ve got to fix it before it rains.”