Minnesota taxpayers who want to support affordable-housing projects from Hackensack to Rochester — and get a big tax credit in return — can do so now thanks to an innovative new state fund.
Minnesota Housing, the state's housing finance agency, has launched a new six-year fund to drum up donations from businesses and individuals in exchange for an 85% tax credit. To get the tax credit this year, the deadline to donate is Dec. 13.
"In the housing space, this is really special," said Jennifer Ho, who leads the agency. "For people who are trying to figure out how to help, this is the way to help."
Since starting in October, the State Housing Tax Credit Program and Contribution Fund has collected $3.5 million from individuals as well as $1 million from Securian Financial in St. Paul, the largest one-time gift so far. Donors can contribute $1,000 to $2 million to specific affordable-housing projects or to the general fund, and receive almost all of that back in the form of a tax credit when they file taxes next spring.
The fund is limited to receiving up to $11.6 million in contributions a year.
Most of Minnesota Housing's grants and loans come from state coffers so it's rare for a government fund, especially at the housing agency, to accept private donations. The Legislature approved the creation of the fund in 2021 and it got bipartisan support.
"It was very clear that the affordable housing issue was bigger than government. Government could not solve it all," said Sen. Carla Nelson, R-Rochester, chief author of the Senate bill, adding that the fund is revolutionary because it brings in "private investment and to allow all Minnesotans who choose to participate to be part of the solution."
While the Legislature this year approved a historic $1 billion housing bill, more aid is needed as evictions rise and Minnesota faces a persistent shortage of affordable housing, said Rep. Mike Howard, DFL-Richfield, chief author of the 2021 House bill.
While individual donors and businesses can also donate directly to affordable-housing nonprofits to get a federal tax deduction, the state tax credit incentive is available to those who take the standard deduction, a majority of taxpayers.
Mary Tingerthal, former commissioner of Minnesota Housing, said the idea for the fund came years ago from a similar one established in North Dakota to bolster affordable housing in the western oil fields.
Now, she's one of the first taxpayers to donate to the fund, and she said the philanthropy can have an immediate impact both for taxpayers and for projects statewide, from St. Cloud to St. Paul. (To contribute or for more details, go to mnhousing.gov/shtc-contribution.html.)
In Minneapolis, Project for Pride in Living is redeveloping a site where a Wells Fargo bank on Lake Street burned in the civil unrest after George Floyd's murder, adding businesses and 110 affordable apartments. Costs for the $60 million project have risen as interest rates and construction expenses spiked, so donations will help fill the final funding gaps, said Paul Williams, CEO of Project for Pride in Living.
"This is an all hands on deck situation that we're facing," he said. "It's these final [financial] gaps that are so challenging to fill, and this is the kind of tool that could really help out."