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MN2020 - Bonding Homes, Bonding Communities
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Bonding Homes, Bonding Communities

January 24, 2012 By Lee Egerstrom, Economic Development Fellow

While big ticket public works projects—light rail, Nicollet Mall, major bridge construction—usually grab headlines in bonding bill news, it’s the smaller maintenance jobs that are critical to sustaining Minnesota’s communities. One community safety net often overlooked in such large scale proposals is public housing.

Preparing for the legislative session, Minnesota Housing Partnership hosted groups in St. Paul, Duluth, Bemidji and Elbow Lake to share agendas for dealing with affordable housing, homelessness and related problems.

Two themes emerged in these meetings: Maintaining housing creates jobs. Also, when the state has a comprehensive plan to address homelessness and affordable housing, such issues don’t fall on local governments to solve alone.

These groups are encouraged by Gov. Mark Dayton’s recommended $32 million in bonding authority for housing programs within his $775 million bonding package. The housing portion of the bonding proposal is incorporated within his economic development recommendations. That larger section accounts for 26 percent of the total package.

Minnesota Housing Commissioner Mary Tingerthal said the housing request would break out $25 million in housing infrastructure bonds to preserve federally subsidized rental housing and help communities harmed by foreclosures to create affordable housing through rental units and community land trusts. It would also be used to acquire and rehabilitate permanent supportive housing for people at risk or already experiencing long-term homelessness.

In addition, she said, the governor’s proposal would provide $7 million in general obligation bonds for public housing preservation. These bonds would be used to help the 124 local housing authorities throughout Minnesota with health and safety issues, replacement and repair of major systems and for energy conservation to reduce operating costs at public housing units.

Chip Halbach, Minnesota Housing Partnership’s executive director, said some legislative leaders have indicated they may cut the governor’s bonding recommendations in half or more closely to around $400 million. What that might do to housing bond requests in unknown.

Legislative work on the bonding programs starts just as federal housing officials are exploring ways to convert foreclosed Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) properties into rentals. The stated intent is to make more affordable housing available, given tight rental markets around the country, while at the same time lifting surplus property off local markets that are depressing home values.

Similarly, the Federal Reserve Board of Governors has supplied Congress with a 26-page “white paper” that identifies tight credit problems as holding back the housing market and U.S. economy. In letters to congressional leaders, Fed Chairman Ben Bernanke signaled that some changes might be forthcoming.

Regardless what changes in federal policy may evolve, Minnesota housing organizations and officials will need to be “quick on their feet” to implement programs, said the partnership’s Halbach.

That starts with keeping the Minnesota Housing Finance Agency adequately armed with bonding authority.

Here are some of the legislative goals being sought by affordable housing-related organizations:

The Minnesota Coalition for the Homeless seeks $30 million in housing appropriations bonds and $10 million in General Obligation (GO) bonds to rehabilitate public housing throughout the state.

It also seeks restoration of $3 million in funding for the Long-Term Homeless Support Services Fund, and restoration of $2 million to the Housing Trust Fund Rental Assistance Program. Budget cuts to the long-term fund a year ago have already impacted 184 households, the group said.

Twin Cities Habitat for Humanity also supports the $30 million and $10 million bonding authority split, and it called for creating Tax Increment Financing (TIF) districts around publicly subsidized developments to assist affordable housing. It also wants a state housing tax credit to help developers raise capital needed for acquisition, rehabilitation and development of affordable housing.

The Metropolitan Consortium of Community Developers calls for maintaining funding for affordable housing programs at the federal, state and local levels. Among its other policy recommendations, it calls for stronger foreclosure prevention and recovery regulations at both the state and federal levels.

The All Parks Alliance for Change (APAC) organization, representing manufactured, or mobile home park residents, wants state law changed so cities can’t apply higher water service rates on parks than applied to single-family homes. Cities now charge housing parks a commercial rate and those higher costs are passed along to park residents.

Also, APAC wants the Legislature to undo a 2011 session cap of $1 million placed on the Manufactured Home Relocation Trust Fund. The fund is to provide moving costs or a home buyout in the event a park closes. The residents’ group said that cap wouldn’t cover the cost of a single park closing.

Finally, the Minnesota Community Land Trust Coalition said its supports the Minnesota Housing Finance Agency’s appropriations and bonding requests, and it supports creation of more community land trusts to assist the rehab and construction of more affordable housing. The latter would help homebuyers access federal FHA and VA mortgage options.

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