Legislation seeks $500 million in housing infrastructure bonds to help meet state’s affordable housing deficit

A 2023 law provided an historic $200 million for housing infrastructure bonds, but more than twice the size of that one-time investment is now being sought.

Rep. Michael Howard (DFL-Richfield) sponsors HF4194 that would expand eligible uses of those funds and issue an additional $500 million in housing infrastructure bonds. This is 10 times the amount requested by Gov. Tim Walz in his capital budget recommendations.

“What’s important here is this bill provides a level of investment that is consistent with the need,” Howard said. “Housing infrastructure bonds are really the state’s key tool to building affordable housing.”

The House Capital Investment Committee approved the bill on a voice vote and sent it to the House Housing Finance and Policy Committee.

Howard said last year’s appropriation is lifechanging and provides hundreds, if not thousands, of units, but the needs continue to grow. Nearly 600,000 Minnesotans pay more than 30% of their income for housing, and the state is 100,000 units short for people with the lowest income, he said.

The bill would also clarify and expand the use of the bonds to include housing cooperatives and recapitalization. Funds could be used to restructure debt or address deferred maintenance, security, insurance, and renovations.

The expanded uses are important because about one-third of residents in affordable housing risk losing their home because operators can’t keep up with expenses, said Elena Gaarder, CEO of the Metropolitan Consortium of Community Developers.

Rep. Fue Lee (DFL-Mpls), the committee chair, hopes organizations that come forward have a plan to address deferred maintenance and not depend on the state to make a secondary investment.