With call for funds to help rebuild damaged neighborhoods, Walz bonding plan meets resistance from House GOPers

Gov. Tim Walz would like to see Minnesota’s bonding money go toward repairing and rebuilding, with a side order of unlocking federal funds.

An overview of his bonding proposal was presented to the House Capital Investment Committee Tuesday, with dollar figures attached to each area of focus. While the projects will come up over the course of multiple bills this session, this was an opportunity for the various bodies overseeing them to speak of the need and the process.

The plan calls for $518.3 million in capital investment, with $490 million coming from bonds and $28.3 million from the General Fund.

Jim Schowalter, commissioner of Minnesota Management and Budget, said 51% of bonding dollars would go toward investing in communities, 46% to maintaining existing assets, and 3% to ensure that federal funds come to Minnesota.

“Interest rates were between 1.26% and 1.6% on the most recent bonds,” he said. “We’re at historic lows, and are in a stronger position for the next biennium. … And this is well within our guidelines on what we think is fiscally responsible for debt capacity.”

No objections were raised to repairing state buildings and cutting into their deferred maintenance backlog. But tensions arose between committee members when reconstruction came up.

Rebuilding in Minneapolis and St. Paul

The governor recommends authorizing $150 million in redevelopment appropriation bonds to support rebuilding efforts in areas in Minneapolis and St. Paul destroyed by arsonists following the death of George Floyd. It is portrayed by Employment and Economic Development Commissioner Steve Grove as an investment in jobs, preserving the tax base, and preventing displacement of small businesses.

“One of the most important reasons for businesses looking to relocate is a thriving urban core,” Grove said. “We want to make sure that we’re focusing on small businesses and long-term housing. … This is a key element of our recovery.”

One Republican member vociferously objected.

Rep. Eric Lucero (R-Dayton) asked why his constituents should help fund rebuilding sections of Minneapolis.

“Carjackings, gunshots, and just crime-ridden," he said. "And this is a direct result of a failure of leadership. … What should I tell my constituents when they’re asking the question, ‘Eric, why should I pay for rebuilding a Minneapolis that is infested with crime and there doesn’t seem to be any interest in solving that at the Minneapolis council level?’”

Grove replied, “I can’t go out there and pitch businesses to come and thrive and grow in Thief River Falls or Roseau or Albert Lea or anywhere in the state without saying that we have the kind of state that can respond to crisis. We have good government that can fix things when they’re broken.”

The committee chair, Rep. Fue Lee (DFL-Mpls), offered an invitation to Lucero.

“I encourage you to come to Minneapolis and talk with these businesses that are crucial to our state and its outlook going forward. … I encourage you to listen to the folks who are living through this every single day when we fail to do anything at the state level.”

Rep. John Huot (DFL-Rosemount) said other state disaster rebuilds have occurred without blame. “In not one place have I read that we went after the mayor or the leadership because they didn’t put in a flood retaining wall when we told them to or straighten a curve in the road where a truck rolls over. … There’s no report I’ve seen on any root cause of what happened in Minneapolis and who we blame for that.”

Housing

The second largest total in the governor’s request is $100 million in housing infrastructure bonds to preserve and build new housing. Funds would be awarded to private developers, both for-profit and nonprofit.

Jennifer Ho, commissioner of the Minnesota Housing Finance Agency, said, “95% of housing in the state is privately owned, and this allows us to invest in those. … It’s great to signal to the development industry that we’re going to make year-to-year investments in housing. If we do this, it will be three years in a row. We need to get out of this housing shortage.”

Fixing college and university buildings

The Higher Education Asset Preservation and Replacement program is dedicated to the repair and replacement of buildings on the campuses of the University of Minnesota and Minnesota State systems. Respective officials have declared the university’s current total deferred maintenance is $2.15 billion, while Minnesota State’s is at $1.1 billion.

The governor’s proposal calls for $62.4 million to fund Minnesota State’s upgrades in such areas as roofs and heating, ventilation and air conditioning systems, while the University of Minnesota’s total would be $56.9 million.

Other items in the governor’s bonding proposal include:

• $43 million for security upgrades in the Capitol Complex, including $12 million from the General Fund;
• $33.4 million to maintain Department of Natural Resources property;
• $19.1 million to upgrade DNR buildings;
• $15 million to support capital projects from community-based organizations led by and serving communities of color and American Indians;
• $10 million to complete Minnesota’s share of design and environmental work for a second daily Amtrak train between the Twin Cities, Milwaukee and Chicago;
• $9.7 million to repair the state’s correctional facilities;
• $4.5 million for a new state veterans cemetery in Redwood Falls;
• $4.2 million for the Department of Human Services’ asset preservation needs in direct care and treatment;
• $3.1 million for emergency repairs and hazardous material abatement in state-owned facilities;
• $1.9 million for asset preservation in the Department of Veterans Affairs;
• $1.5 million to the Minnesota Historical Society for preservation and restoration;
• $1.2 million to fund asset preservation on the state academies' Faribault campus;
• $1.1 million in temporary relief for the state parking fund;
• $777,000 for maintenance on the Perpich Center for Arts Education;
• $250,000 to repay previous bond investments in Upper Sioux Agency State Park; and
• $240,000 to cover bond sale expenses.