Legislation could protect low-income tenants in apartments primed for rent hikes

To prevent low-income tenants from being priced out by upgrades to relatively inexpensive apartment complexes, lawmakers are considering making millions of dollars available to affordable housing operators to buy the properties and keep rents low.

HF443, sponsored by Rep. Michael Howard (DFL-Richfield), would make $50 million from the General Fund available between July 2021 and June 2024 for the purchase and rehabilitation of affordably priced, unsubsidized apartments. These buildings are sometimes known as naturally occurring affordable housing.

Grants and loans could only be used to acquire properties deemed by the Minnesota Housing Finance Agency or a statewide intermediary to be at risk of seeing rent increases and tenant displacement.

Housing operators would need to meet affordability thresholds for 15 years and would be prioritized for funding if they commit to reserving at least 15 units for people experiencing homelessness.

They would generally be required to accept Section 8 vouchers.

The bill was laid over by the House Housing Finance and Policy Committee Tuesday for possible inclusion in an omnibus bill. Its companion, SF768, is sponsored by Sen. Kari Dziedzic (DFL-Mpls) and awaits action by the Senate Housing Finance and Policy Committee.

Howard said inexpensive apartments are desirable for developers, who can buy them and raise rents hundreds of dollars, displacing tenants who can't afford to pay more. That happened in 2015 in Richfield, when 2,000 tenants, including over 100 children, were forced out of Crossroads at Penn by an upgrade-minded developer.

About 40 children experienced homelessness because of the eviction, and the city's school district was forced to immediately lay off 33 staffers, according to Howard and Richfield Mayor Maria Regan Gonzalez.

She said cities have limited ways of supporting organizations looking to preserve such apartment complexes.

Bonding for acquisition, rehabilitation

A bill approved Tuesday by the housing committee, HF1118, sponsored by Rep. Esther Agbaje (DFL-Mpls), would allow housing infrastructure bonds to be spent on naturally occurring affordable housing acquisition and rehabilitation.

It would define such buildings as those not subsidized by state or federal governments in which most units are affordable to renters with incomes at or below 60% of the area median income. In the Twin Cities, for example, that's $51,700 for a family of four.

The bill’s next stop is the House Capital Investment Committee. It has no Senate companion.