Faith leaders and DFL lawmakers are pushing legislation to create a state-based rent subsidy program for low-income Minnesotans that they say could bring hundreds of thousands of people out of homelessness.

But with a $1 billion-a-year price tag, the plan faces tough odds during the upcoming legislative session that convenes next week.

DFL legislators and advocates unveiled the plan Tuesday in front of the snow-covered debris of the Francis Drake Hotel, a homeless shelter that burned down on Christmas Day. The blaze displaced more than 200 people.

“The Drake fire highlighted the housing crisis. It showed that working people can’t find affordable homes,” said Sen. Kari Dziedzic, DFL-Minneapolis. “Providing rent subsidies in this bill is to stabilize families.”

Individuals or families that earn under 50% of the median income in their region and who pay more than 30% of their income toward rent would qualify for rent subsidies. Those who qualify could get vouchers from their local or regional housing authorities to cover rent payments over 30% of their income.

Rep. Michael Howard, DFL-Richfield, acknowledged that the plan is expensive but said it’s the only immediate way to address homelessness on a large scale. He said roughly 550,000 Minnesotans pay too much of their income toward rent.

Although the upcoming session of the Legislature is not slated to take up budget matters, lawmakers will debate how to spend a projected $1.3 billion budget surplus.

“Some will say ‘can we afford this?’ I would argue we can’t afford to maintain the status quo, we need to revise how we address our affordable housing crisis,” Howard said. “Sure, we absolutely need to be building more affordable housing in the state, but the reality is we cannot through building alone address our affordable housing crisis.”

The proposal is part of a broader push from Democrats to establish more affordable housing options in the state. Gov. Tim Walz wants to borrow $276 million in the state bonding bill to construct or renovate permanent affordable housing options.