SAINT PAUL, Minn. – Today, Rep. Michael Howard (DFL - Richfield), chair of the House Housing Finance and Policy Committee, and Rep. Nathan Coulter (DFL - Bloomington) held a press conference to highlight legislation to crack down on worker exploitation on publicly financed affordable housing projects.
Representatives Howard and Coulter are sponsoring legislation (including HF 4569, which advanced through the Labor and Industry Committee earlier today) that would ensure greater transparency, standards, and accountability in publicly funded affordable housing projects. This includes requirements for prevailing wage and the use of responsible contractors on projects that receive funds from Low-Income Housing Tax Credits (LIHTC) and Tax Increment Financing (TIF).
“Minnesota faces a substantial housing shortage, with Minnesotans across the state struggling to find a home to rent or buy. In our all-hands-on-deck efforts to build more housing, we cannot look the other way when the workers constructing these homes are exploited and put at risk,” said Rep. Howard. “Sunshine is the best disinfectant, which is why our legislation would require transparency and accountability from developers. We must not allow public dollars to go towards the abuse of workers.”
“Minnesotans deserve to know that their tax dollars aren’t subsidizing abuse and exploitation of workers,” said Rep. Coulter. “When used well, TIF can be a powerful tool to generate development and redevelopment where they are most needed. Our communities need tools like TIF to encourage economic development, but that should not come at the expense of workers’ livelihood or their lives.”
Minnesota has a severe and growing housing crisis, with the supply of low-cost rental housing in Minnesota decreasing by a quarter over the last decade. To address this crisis, lawmakers delivered $1 billion worth of housing investments during the 2023 legislative session – the largest in state history. However, without stronger oversight over the use of LIHTC and TIF dollars, new housing projects are at risk of being built by vulnerable workers who earn too little to live in the homes they build.
Wage theft and exploitation remain persistent problems in the construction industry. A report (“Subsidizing Abuse: How Public Financing Fuels Exploitation in Affordable Housing Construction”) recently published by the independent research institution North Star Policy Action (NSPA) details repeated abuses by contractors receiving public funds for affordable housing projects. The report also details a lack of labor standards on projects funded by LIHTC and TIF. A one-page summary of the report can be found here.
“Our report paints a troubling picture of taxpayer support for construction practices that exploit at-risk workers,” Executive Director of NSPA Jake Schwitzer said, “The legislature needs to take steps this session to prevent this exploitation by increasing transparency, adopting responsible contractor standards, and holding project owners accountable for abuses. Minnesota can, and must do better protecting workers as we address the affordable housing shortage throughout the state.”
The report noted workers were at potential risk of exploitation by problem contractors on 25 projects receiving $31 million in LIHTC funding since 2016 and 14 projects receiving approximately $53 million in TIF subsidies since 2018. Three of the largest for-profit recipients of LIHTC and TIF funding repeatedly used contractors that have records of labor law violations or face serious allegations of worker exploitation.
Impacted worker Arturo Hernandez also spoke at the press conference. After working on a job for three weeks, the company that hired him insisted on paying him with drugs. Arturo refused to take the drugs as a payment and has never received any money for the three weeks of work. Arturo was one of several Spanish speaking workers that was exploited by this company and is now telling his story to prevent this from happening to others.
Video of today’s press conference and the House Labor and Industry Committee hearing can be found here.
###