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Housing spending approved

Published (3/25/2010)
By Lauren Radomski
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Proponents of a $30 million housing bill say the legislation could result in about 1,200 new construction-related jobs. The big question is whether the state can afford it.

Rep. Karen Clark (DFL-Mpls) sponsors HF3678, which would permit the Housing Finance Agency to issue up to $30 million in “challenge program bonds” for its Economic Development and Housing Challenge program, which offers an incentive for private employers to contribute to affordable housing projects. The money would be distributed as grants and loans for land acquisition and projects meeting program standards.

The bill received broad support from housing developers and construction representatives at a meeting of the House Housing Finance and Policy and Public Health Finance Division March 16. Proponents called the legislation a jobs bill that would provide needed housing and jump-start the struggling construction industry.

“We all know that housing was the impetus for the economic collapse affecting us all, and until we fix housing, we won’t return from the brink of this collapse,” said Kim Voss, housing director for Interfaith Outreach and Community Partners in Wayzata.

Clark amended the bill at a division meeting March 24 after HFA officials said they were concerned the bonds would have limited marketability with only the backing of the agency. Under the amendment, debt service would be paid through the General Fund with money withheld from the HFA’s challenge fund. Each year through fiscal year 2023, the HFA would receive any of the withheld money that wasn’t spent on debt service.

Jeanette Blankenship, HFA policy specialist, said the agency is uncomfortable with the prospect of using current appropriations to pay off bonds, thus reducing immediate cash flow. Blankenship is also concerned the proposal would set a precedent of individual agencies issuing bonds, rather than going through Minnesota Management & Budget.

Clark reiterated that the bill is permissive and does not require the HFA to issue bonds.

Division members approved the amended bill 8-4 in a roll call vote, sending it to the House Finance Committee. A companion, SF3273, sponsored by Sen. David Tomassoni (DFL-Chisholm), awaits action by the Senate Health, Housing and Family Security Committee.

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