Quashing public financing for corrupt developers at heart of bill

Public financing of housing construction projects is fueling exploitation in Minnesota.

So says Rep. Michael Howard (DFL-Richfield), who sponsors HF4569 that would require contractors receiving state financial assistance or tax credits to pay their workers a prevailing wage. It would only apply to housing projects of 10 or more units.

Should they fail to do so, they would be disallowed further public financing opportunities on projects allocated federal low-income housing tax credits by the Housing Finance Agency.

The House Housing Finance and Policy Committee approved the bill and sent it to the House Judiciary Finance and Civil Law Committee Tuesday.

“We’re talking about contractors who have refused to pay their workers’ wages and offered them illegal drugs instead, or used child labor, or threatened to fire a woman for reporting sexual assault on the job, or covering up serious workplace injuries,” said Jake Schwitzer, executive director of North Star Policy Action.

More than $84 million in taxpayers’ subsidies have gone to contractors with proven or alleged labor violations, he said.

Most Housing Finance Agency projects are subject to prevailing wage, but a loophole exists when it comes to housing projects built under the Low-Income Housing Tax Credit program and with local tax increment financing. 

Howard said developers would be required to provide a list of the contractors and subcontractors they’re working with, including those that have a history of poor labor practices.

“What we see here is a bill that would help us ensure that when we’re building homes that are affordable and that we’re doing so with respect and dignity for the workers that are building them,” Howard said.

Not every person who testified favored the bill.

Jon Boesche, director of government and public affairs for Associated Builders and Contractors of Minnesota, said it would drive up the cost of multifamily housing.

Rep. Brian Johnson (R-Cambridge) likes the concept of the bill but is concerned developers will be held liable for the actions of contractors and subcontractors. This would make matters worse at a time when the state is facing a shortage of 100,000 housing units, he said.