Bonding for building: Minnesota organizations work together to get legislature to fund housing

Building affordable housing is not a primary purpose of a bonding bill. In fact, the jobs-creating bonding bill passed this summer left housing out entirely.  So far, however, this session’s bonding bill, is different. Proposals by Governor Mark Dayton and both the Republican-controlled House and Senate have all included money for housing, and that’s not by accident.

The millions of dollars likely to be pumped into affordable housing projects are the result of a concerted collaboration among the state Housing Finance Agency, non-profit housing organizations and housing development companies from around Minnesota.

Except in special cases like this summer, bonding bills are passed every couple years to determine how much money the state will spend on jobs-creating infrastructure projects. This year’s proposals include money for building projects on college campuses, capitol building renovations and road and bridge construction. 

Governor Dayton’s bonding bill proposal released in January, which included a total of $775 million, set aside $32 million for housing. The much smaller $280 million House bonding bill set aside $15 million for housing. And although the Senate bonding bill included fewer total bonding dollars than Dayton’s, the $496 million proposal released Wednesday included $36 million for housing.

The proposals fall short of a request from the Housing Finance Agency for $40 million, but it’s enough to leave many housing advocates giddy. “It’s a drop in the bucket for the need, but it is a sign of investment for the state,” said Liz Kuoppala, executive director of the Minnesota Coalition for the Homeless. “If we get this, it will be a huge win for housing and homeless advocates and a huge step forward for the legislature.”

Organizing around an emergency

The housing community has been in a state of crisis for the last decade. “There’s just been emergency after emergency after emergency,” said Darielle Dannen, public policy director for the Metropolitan Consortium of Community Developers.

It was the housing crisis that led to the economic recession. Foreclosures sent homeowners out of their homes and into the rental market, where vacancies dropped as rents soared. That meant the lowest income community members couldn’t afford apartments anymore, and up went the homeless population. 

A recent report found that Minnesota is the least affordable state for renters in the Midwest — to afford a two-bedroom apartment, a minimum wage worker would have to work 86 hours per week. The number of homeless children reported by public schools in Minneapolis, St. Paul and Duluth is up 16 percent from last year.

Housing leaders say Minnesota housing commissioner Mary Tingerthal catalyzed a collaboration that led to the inclusion of housing in the bonding bill. Under her direction, advocates began meeting this summer to help the state Housing Finance Agency come up with their $40 million proposal. As a vote creeps closer, advocates have continued to meet regularly to hammer down a common message.

It sounds like a “duh” — organizations that all want similar things would naturally work together, right? “In the ideal world, that’s how things work but you know it isn’t always like that,” Dannen said. “It sounds like a small thing, but it’s a big thing.”

Without that collaboration? “I don’t even know if we would’ve made it this far,” said Pat Steiger, executive director of the Minnesota Community Land Trust Coalition. She said legislators have commended advocates for their streamlined message. “They couldn’t believe it,” said Steiger.

Where the money would go

The different versions of the bill would provide varying levels of funding for public housing rehabilitation, supportive housing for the homeless, federally subsidized rental housing and money to address foreclosures.

Rehabilitating and maintaining publicly funded housing will be key to stopping the number of affordable units in Minnesota from dropping.

Decades ago, the federal government mostly stopped investing in public housing and project-based section 8 housing. Today, most new affordable housing projects are funded through tax credits, but renters continue to rely on public housing and section 8 projects now 20 to 40 years old.

For section 8 housing, neglecting to reinvest could lead to large chunks of housing leaving the subsidized program and losing its affordability. Under the program, landlords charge lower rents to lower income renters, and the federal government sends a check for the difference. Property owners sign on to participate for 20 to 30 years.

Today, that housing is old and so are many of its landlords. They’re retiring or selling their properties or opting out of section 8 as their agreement expires. But if those property owners accept money for housing rehabilitation, they’ll have to maintain its affordability for at least another 20 years.

Foreclosure relief is another piece of the bonding puzzle. One way to create affordable housing out of the ample stock of foreclosed properties is to turn them into land trust housing. Under the model, a nonprofit purchases the land, rehabilitates the house, then sells it at an affordable price. The nonprofit protects the land under a 99-year lease. The low-income homeowner eventually sells their home at a requisite affordable value. The bonding bill would provide money to purchase that land.

Supportive housing, another model that would receive bonding money incorporates services for the mentally ill, for youth, for substance abusers, etc.

One of Dannen’s favorite projects to share with lawmakers is one that would convert old officers’ houses at Fort Snelling to supportive housing for veterans. Another would build housing for homeless youth in Duluth. Dannen said both those projects are ready to go — all they’re missing is funding.

Next Steps

The dollar amount set aside for housing could change at any of the many steps left in the legislative process. Lawmakers in both the house and senate still have to vote on each proposal. From there, the bill goes to conference committee where differences between the two versions are hammered out. The new bill returns to the legislature where each body votes again, and then it’s off to the governor’s desk.

Lawmakers accelerated the pace of this session in hopes of finishing early, so there could be a vote next week; it could be several weeks.

Kuoppala and Dannen are co-chairs of a new Homes for All alliance, which will build on the collaborative work started this summer.  

Want to get involved? Click here.

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