Non-metro communities could use TIF for workforce housing

Jobs are going begging in parts of Greater Minnesota where would-be workers have nowhere to live, but tax-increment financing could help build new homes.

Rep. Dan Fabian

HF684, sponsored by Rep. Dan Fabian (R-Roseau), would add workforce housing to the types of businesses that cities can designate as economic development districts to get TIF benefits.

By using TIF, cities may apply the increased property taxes that a new development generates to finance costs of the development.

The House Job Growth and Energy Affordability Policy and Finance Committee approved the bill and sent it to the House Taxes Committee Wednesday.

The shortage of workforce housing is particularly acute in northwestern Minnesota communities such as Roseau that have large employers seeking to expand, Fabian said. Low rents and low appraisal rates on existing local housing mean banks cannot finance the full cost of multifamily development projects.

The Minnesota Chamber of Commerce is “very supportive” of the bill, said Beth Kadoun, the organization’s fiscal and tax policy director. “The market for building this housing is just not working.”

Rep. Tim Mahoney (DFL-St. Paul) challenged Fabian on leaving the seven-county Twin Cities metropolitan area out of the bill. “This is a pretty big item, to change TIF to do workforce housing and to exclude where at least half of the state lives — a pretty big precedent,” Mahoney said. “The only good thing we now know that the Minnesota Chamber does believe in socialism on occasion.”

The companion, SF668, sponsored by Sen. LeRoy Stumpf (DFL-Plummer), awaits action by the Senate Taxes Committee.