Cuts to Minnesota Challenge Fund for housing questioned

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A 69 percent proposed reduction to the Housing Challenge Fund, which helps create affordable housing, should not be on Gov. Tim Pawlenty’s chopping block for the 2010-2011 biennium, policymakers say in reaction to a new affordable housing study.

According to a recent report produced for the Minnesota Housing Partnership and Greater Minnesota Housing Fund, $1 million from the Challenge Fund creates 40 new units of affordable housing. Pawlenty’s budget proposal calls for a $23.5 million cut.

The Challenge Fund combines private capital with public funds in a way that encourages development of privately owned, but publicly assisted, affordable and accessible housing. Within five years, 72 percent of the state’s financial investment could be recouped through repaid state tax revenues, according to a partnership analysis. Supporters said it offers additional economic benefits through job creation and increased tax revenue.

“It really is, among the agency’s programs, the biggest job producer, tax producer back to local and state government,” said Chip Halbach, executive director of the partnership.

Rep. Karen Clark (DFL-Mpls), chairwoman of the House Housing Finance and Policy and Public Health Finance Division, which took no action, noted the governor did not have access to the report when creating his budget. “The incredible impact on our economy is very well laid out.”

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