Three House panels hear governor’s plan for big increase in public housing bonding

“Going big so everyone can go home.”

It’s a catchphrase being tossed around in Gov. Tim Walz’s administration. The idea is that a larger investment is needed in public housing to confront the state’s problems with unaffordable housing and homelessness.

Since 2012, one of the state’s chief tools in that area has been housing infrastructure bonds, which can take the form of appropriation bonds or general obligation bonds. The governor has recommended that the state issue $100 million in housing infrastructure bonds, a fivefold increase over the state’s previous highest total (from 2014) and $74 million more than in 2020.

That was the topic of Tuesday’s joint meeting of the House Capital Investment Committee, the Housing Finance and Policy Committee and the House Preventing Homelessness Division. The presentation featured representatives from multiple nonprofits that partner with the state, each urging a significantly higher investment in public housing.

“Nothing else in life goes well if you don’t have a place to sleep at night,” said Rep. Alice Hausman (DFL-St. Paul), chair of the housing committee. “While we had $20 million in housing infrastructure bonds in 2014, we only had $16 million in 2020. In the largest bonding bill ever, we went backward in public housing.”

A bill will be coming before the capital investment committee with the governor’s $100 million proposal, and Tuesday’s hearing set the stage with information about the history of housing bonding and the difference that public housing has made in the lives of testifiers.

Jennifer Ho, commissioner of the Minnesota Housing Finance Agency, said bonds have become the largest state source of capital for housing, partially because they leverage other funds for housing development. But she said the total requested still falls significantly short of the need.

“You want everyone to get over the finish line,” Ho said, “but when we don’t have a large amount of housing bonds available, we say no to three of four requests. When we have more money available, I only say no to two of three.”

Her agency’s focus is not only on building new housing, but making older housing more habitable.

“A lot of public housing was built in the ‘60s and ‘70s,” Ho said. “And, in many cases, the federal government has not kept up with upkeep. Since 2012, about $45.5 million has been authorized and awarded to 96 projects, improving 6,850 units. About a third of the units are for families with children.”

Ho emphasized that affordable housing is an issue throughout the state, something underlined with presentations on improvement projects for public housing in Itasca County, Willmar, Virginia, Red Wing, Dakota County, St. Paul and Minneapolis. 

Buffy Beranek, executive director of the Southeastern Minnesota Multi-County Housing and Redevelopment Authority, emphasized the level of unmet need. She said a March 2019 report found that $355 million in improvements were needed for public housing units in the state.

“Our current need is $355 million,” she said. “We’re asking for $100 million.”

Rep. Eric Lucero (R-Dayton) asked if there has been an analysis on the building costs side of the equation.

“We’ve done a lot of analysis,” said Chad Adams, chief executive officer of the Southwest Minnesota Housing Partnership. “We’ve seen a 75% to 100% rise in building costs since 2010. Fortunately, more communities are stepping up to partner with us.”

Rep. Dean Urdahl (R-Grove City) asked if the Walz administration planned to make a similar bonding request in 2022.

“That will be up to the governor,” Ho said.