Dayton's proposal for $90 million in affordable housing catches attention of developers

The prospect of record amounts of state financing for new affordable-housing construction via capital bonding caught the attention of multifamily housing industry players.

Developers and others attending an event hosted by the Minnesota Multi Housing Association (MHA) this week received legislative updates from industry lobbyists and government agency leaders. And, in this year's 11-week "short" session, it was Gov. Mark Dayton's proposal to allocate $90 million in bonding authority for affordable housing, a record amount, that dominated the discussion.

The apartment developers, owners and managers who comprise the MHA's membership are typically most concerned about taxes and new regulations affecting how they do business. For instance, MHA Director of Government Relations Todd Liljenquist reported on a measure in the pending omnibus tax bill mandating that landlords submit "certificates of rent paid" to the Minnesota Department of Revenue as well as to renters by the end of January each year.

But, he added, most of the major regulatory issues affecting multifamily housing were settled last year in the first half of the 2015-16 legislative biennium, thus leaving the bonding proposals as the current center of attention for industry members.

That's mainly because of the size of the proposal from Dayton and the Minnesota Housing Finance Agency. Under the request, some $20 million of the $90 million would go to local housing agencies around the state to help preserve and upgrade publicly owned housing, for instance, installing energy efficiency upgrades.

But the lion's share, $70 million, is earmarked for the MHFA's Housing Infrastructure Bond (HIB) program. That fund is specifically earmarked for the rehabilitation of existing low-income housing units and the construction of new "supportive" housing, which combines social services and apartments targeted to those on the edge of homelessness.

One recent example of the kind of new construction eligible for HIB funds is Prior Crossing, a 44-unit apartment building now under construction along University Avenue W. in St. Paul. Beacon Interfaith Housing Collaborative won $5 million in HIB funds in 2014 for the project. The Amherst H. Wilder Foundation will provide its on-site social services.

The $90 million for housing is a relatively small part of Dayton's total bonding request of $1.4 billion, much of which focuses on college and university building construction and water quality improvement projects.

Republican House of Representatives leaders have responded with a $600 million bonding proposal. While Senate Democrats have yet to release their bonding targets, their request is likely to fall somewhere between the two totals, predicted MHFA Assistant Commissioner Ryan Baumtrog.

"At this point the process, it's a lot about positioning," he said. "If it works out like it has in past sessions, I kind of expect the Senate to be right in the middle in terms of the bonding bill size."

Shannon Guernsey, executive director of a trade group representing public housing authorities and low-income housing developers, called the $600 million proposed by House Republicans "surprisingly anemic" and predicted there would be "a lot of maneuvering" as Democrats and Republicans work out a bonding bill compromise within the larger context of how to divvy up a projected $900 million budget surplus.

Meanwhile, Baumtrog also called attention to a measure authored by Rep. Alice Hausman, DFL-Roseville, that would expand the kinds of projects eligible for HIB funding to include senior housing, which many believe is the next frontier in the struggle to prevent homelessness.

Don Jacobson is a writer based in St. Paul. He is the former editor of the Minneapolis/St. Paul Real Estate Journal.