Help for blighted neighborhoods

Several cities now have the ability to use tax increment financing to develop certain types of housing. This authority could be extended to help communities address vacant and blighted housing due to foreclosure.

Rep. Joe Mullery (DFL-Mpls) sponsors HF2511, which was held over March 15 by the House Taxes Committee for possible omnibus bill inclusion. Similar provisions of the bill are being carried in HF2695, termed the omnibus tax “jobs” bill, which was also laid over by the committee.

Jennifer O’Rourke, a lobbyist at the League of Minnesota Cities, said cities are not looking to take over housing, but there are some significant issues related to blighted housing stock that they are trying to address.

The bill would permit additional use of TIF to include “acquisition, rehabilitation or demolition of moderate priced housing (up to 150 percent of the average market value in the city), that is vacant structurally substandard or in foreclosure.”

“I don’t have a problem dealing with foreclosed properties or expanding the number of communities that could be eligible,” said Rep. Diane Loeffler (DFL-Mpls). However, she would like to see the language more focused on depressed areas that need redevelopment.

“I’m not sure about being able to develop housing that does not exceed 150 percent of the market value in the city. There can be really wild disparities in the city. I could see a part of the city where the average sale price is $300,000 and all of a sudden we are using this to build $450,000 homes. I don’t think that is really what this is intended to do,” she said.

Mullery said the language could be clarified to address the concern.

A companion, SF2255, sponsored by Sen. Ann Rest (DFL-New Hope), was scheduled to be heard by the Senate Taxes Committee March 18.