Challenge Fund cuts questioned

A 69 percent proposed reduction to the Housing Challenge Fund, which helps create affordable housing, should not be on Gov. Tim Pawlenty’s chopping block for the 2010-2011 biennium, say policymakers in reaction to a new affordable housing study.

According to a recent report produced for the Minnesota Housing Partnership and Greater Minnesota Housing Fund, each $1 million from the challenge fund creates 40 new units of affordable housing.

The challenge fund combines private capital with public funds to encourage development of privately owned, but publicly assisted, affordable and accessible housing. Within five years, 72 percent of the state’s financial investment could be recouped through repaid state tax revenues, according to a partnership analysis. The challenge fund offers additional economic benefits through job creation and increased tax revenue.

“It really is, among the agency’s programs, the biggest job producer, tax producer back to local and state government,” said Chip Halbach, executive director of the partnership.

With so many foreclosures and a rise in homelessness, members of one House division questioned the rationale for the $23.5 million biennium program cut.

“The incredible impact on our economy is very well laid out. This study is new. He didn’t have the benefit of it before it was done,” Rep. Karen Clark (DFL-Mpls), chairwoman of the House Housing Finance and Policy and Public Health Finance Division, said at a Feb. 24 meeting. No action was taken.