House passes $1 billion investment in housing, including increased metro sales tax

From homeless people to renters to wannabe-homeowners, help is likely forthcoming.

The conference committee agreement on the omnibus housing finance bill passed the House 70-61 Monday.

Sponsored by Rep. Michael Howard (DFL-Richfield) and Sen. Lindsey Port (DFL-Burnsville), HF2335 would appropriate $1.07 billion during the 2024-25 biennium for needs across the housing continuum, $950 million in mostly onetime new cash.

“This bill makes historic investments all across the housing continuum, all across the state,” Howard said. “… It’s excellent to see it at the 1-yard line here.”

[MORE: View the spreadsheet and the conference committee report]

While the Senate agreed to a seven-county metropolitan sales tax increase, the House accepted lower spending on other priorities.

Raising tax for metro shoppers by 0.25%, the increased sales tax would split its estimated $353.2 million in revenue as follows: 50% to metropolitan county aid; 25% to metropolitan city aid; and 25% to statewide rent assistance.

[MORE: View the metro sales tax revenue analysis; look at sales tax around the state]

A new first-generation homebuyer down payment assistance program, originally a $150 million appropriation in the House is now $50 million.

The other $100 million would create a community-based first-generation homebuyers assistance program. Not in either body’s omnibus bill, assistance would be limited to 10% of the home purchase price, up to $32,000, and it could be used on closing costs, down payment, or principal reduction.

We know that homeownership is a way to build wealth and want to give that opportunity to as many people as possible, said Rep. Esther Agbaje (DFL-Mpls). “I do hope that this is a signal to future legislators in Minnesota that this is the baseline. This is where we should always be starting from, and we should go higher.”

The “Bring It Home” rental assistance program would receive $46 million, less than half of what the House initially sought and roughly a third of the Senate’s original proposal.

In the agreement, but less than the House sought are:

• $90 million to establish a community stabilization program to preserve naturally occurring affordable housing through acquisition or rehabilitation, a $60 million drop;
• $65.54 million for homelessness prevention, a $30 million decrease;
• $40 million for homeownership investment grants, half of what was sought;
• $39 million for the Greater Minnesota workforce housing development, $5 million below the House offer; and
• $10 million for manufactured home lending grants. The House sought $25 million.

The Senate agreed to allocate $50 million to establish a stable housing organization relief fund — double the original House-only provision — that would go to nonprofits experiencing significant detrimental financial impact due to loss of rental income, increased expenses, etc.

Other major financial stipulations include:

• $200 million in new, one-time funding for the housing infrastructure program;
• $120.85 million — $95 million in new money — for local housing needs, namely the economic development and housing challenge program; and
• $20.5 million in new money to expand a workforce homeownership program.

The two bodies had already agreed on $74.26 million for housing infrastructure bonds debt service.

Rep. Brian Johnson (R-Cambridge) is “disappointed” in the agreement, particularly because of what he believes is inadequate funding for workforce housing and lack of oversight for nonprofits.

“This isn’t free money. This is tax dollars that was overpaid by the citizens of Minnesota to the point of $17.5 billion.”