Minnesota prepares to release $100 million in housing assistance

State housing officials are preparing to give out $100 million in housing assistance to prevent evictions when the federal government's $600-a-week unemployment subsidy ends July 25, but many fear that won't go far enough.

The COVID-19 pandemic sidelined thousands of workers and drained the savings of Minnesotans with low-income jobs who were already struggling to afford a tight housing market. Many are now bracing for the end of the weekly federal assistance that has helped them scrape by.

"We went into the pandemic really in a tough spot and the pandemic has made it even harder," said Ryan Baumtrog, assistant commissioner of the state's housing finance agency. "We just want to avoid as many evictions as we can, as much displacement and as much potential increased homelessness as we can."

For months, Minnesota lawmakers have discussed spending $100 million in housing aid. But they have yet to distribute the money.

Lawmakers said Gov. Tim Walz could use federal Coronavirus Aid, Relief, and Economic Security Act dollars, but he has held off as the Legislature tried to negotiate a broader housing package.

So far, those efforts have come up short at the Capitol. Lawmakers are preparing to return for another special session in mid-July, but legislators on both sides of the aisle said they expect limited action on housing.

The housing negotiations fell apart amid disagreements over policy changes and the scale of state borrowing. Republicans, who have the majority in the Senate, want to loosen regulations on developers. Sen. Rich Draheim, R-Madison Lake, said regulatory adjustments could help lower housing costs.

The state does not have a specific date planned to start releasing the aid, Baumtrog said. He said Minnesota Housing is waiting on Walz to notify the Legislature and give the housing agency the authority to start distributing the funds.

How the agency would use the $100 million is still being worked out. State officials are considering whether to give out one month of aid to a broader set of people or provide longer-term assistance to a smaller group, Baumtrog said. The demand is likely to exceed the amount that's available, he said.

The Minneapolis nonprofit HousingLink surveyed 926 renters in June to ask what they anticipate after the federal government benefit ends in July. If additional assistance is not provided, 26% of respondents said they will not be able to continue paying rent.

The pandemic has spiked the national unemployment rate to its highest level since the Great Depression. Many whose hours have been cut, or jobs eliminated, are protected by Walz's eviction moratorium — which Baumtrog expects will be extended beyond the current July 12 expiration date.

While tenants haven't been evicted, some have anxiously watched unpaid rent bills stack up, said Hamza Hassan, a housing organizer at African Career, Education & Resource, Inc.

While Minnesota Housing works on immediate assistance, legislators are still negotiating a longer-term public infrastructure borrowing measure. The so-called bonding bill could include money to help with the pent-up demand for affordable housing.

Rep. Alice Hausman, DFL-St. Paul, said she has been told the numbers lawmakers are discussing behind closed doors are fraction of the $276 million Walz initially proposed to borrow for housing. What the final deal will be — and whether legislators can agree to pass a bonding bill in the upcoming special session at all — remains to be seen.

"Uncertainty, I guess, is the word of the day," Hausman said. But if the state continues to delay action on bonding, it could set back housing and other projects, she said, adding, "You run the risk of having lost a whole construction season."

Hausman and housing advocates, meanwhile, pushed for $500 million in total bonds to support housing. They have continued to call for the funding as the coronavirus has battered the economy.

"For the state to not make significant investments at this particular moment in housing will have huge long-term consequences for us," said Kari Johnson, policy co-chair of Homes for All coalition. She said one of the state's biggest mistakes during the Great Recession was not pursuing development of more affordable housing earlier.