Lawmakers eye creation of $10 million loan program for affordable housing

When it comes to housing, lawmakers on the House Housing Finance and Policy Committee agree on two key points.

Minnesota needs more housing, especially affordable housing. And they agree there likely won’t be enough money in the state budget to fund all the promising proposals to address that.   

“I understand we are in a very tough budget situation, but it behooves us to look where we can get the biggest impact,” said Rep. Esther Agbaje (DFL-Mpls).

To that end, she proposes a self-sustaining program to help cities and counties expand their pool of locally owned units. Amended and laid over Tuesday for possible inclusion in a larger bill, HF2148 would appropriate $10 million from the General Fund to establish a new revolving loan program allowing local governments to create permanently affordable homes.

Among other provisions, the bill would:

• offer loans to cities, counties and tribal governments to invest directly in housing;  
• require loans be made so the number of units added to the metropolitan area and Greater Minnesota are roughly equal; and
• ensure housing units are accessible and don’t segregate residents by income.

Locally owned housing can fill gaps left where the private sector doesn’t see enough return on investment to commit its capital, and where federally funded public housing might struggle to cover its operating costs, Agbaje said. 

Among the advantages of locally owned housing, according to Agbaje, is affordable units won’t come off the market because they are in the public trust. It is self-sustaining because market rate units can subsidize more affordable ones. Moreover, community members through their locally elected governments have a say in what their housing looks like, and the developments showcase ways people of different incomes can live together.

Local governments under the program would act as a compliment not a competitor to the private sector, said Melissa Taphorn, executive director of the Washington County Community Development Agency, which owns 990 units. “Frankly we can step in where private development won't,” she said, citing a brownfield as an example.