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House lawmakers consider grant program to spur housing rehab, development across state

Attempting to take a wide-ranging approach to the housing issues in the state, approval was given to a bill that would create new financial opportunities.

HF2880, sponsored by Rep. Alice Hausman (DFL-Falcon Heights), would create grant programs to encourage the development and rehabilitation of housing across the state.

The programs would include a grant for Greater Minnesota cities for infrastructure development; a housing cost reduction program to reimburse cities for fee waivers and reductions provided to developers; creation of the Naturally Occurring Affordable Housing program to acquire and repair current properties; and a pilot program for infrastructure grants.

The bill, as amended, was approved Thursday by the House Housing Finance and Policy Committee on a 6-4 party-line vote and referred to the House Taxes Committee.

Its companion, SF3147, is sponsored by Sen. Kari Dziedzic (DFL-Mpls) and awaits action by the Senate Housing Finance and Policy Committee.

Hausman worked with the League of Minnesota Cities, which dubbed the bill the Comprehensive Housing Spectrum Act.

“We know that there’s innovation happening at the local level to attract and support preservation and development,” Hausman said. “But local governments can’t do it alone. There needs to be a robust state and local partnership if we are to address housing in a comprehensive way.”

The bill would include the following initiatives:

  • create the Greater Minnesota housing infrastructure program for workforce housing development outside of the metropolitan area;
  • impose an excise tax on real estate purchased by corporations;
  • authorize cities and counties to impose mortgage registry and deed taxes;
  • authorize housing infrastructure bonds, including $400 million to be issued by the Minnesota Housing Finance Agency;
  • create a program to reimburse cities for waiving fees or reductions related to housing developments;
  • define the definition of projects for the programs;
  • authorize cities to require property owners to provide relocation assistance to affordable housing tenants when converting the property to “market rate units”;
  • appropriate nearly $22.43 million in fiscal year 2023 for the housing finance agency’s challenge program;
  • create a grant program for Naturally Occurring Affordable Housing and appropriate $50 million in fiscal year 2023 for loans and grants;
  • authorize the sale of up to $100 million in bonds for the rehabilitation of public housing;
  • appropriate $10 million in fiscal year 2023 for grants to local housing trust funds; and
  • appropriate $5 million for a pilot program to offer grants to municipalities for infrastructure improvements that developers would need to pay when constructing new projects.

The excise and mortgage registry taxes were questioned by some members and testifiers.

“I understand, again, that there are bad people out there and bad companies, and we need to hold those people accountable,” said Rep. Matt Bliss (R-Pennington). “But we don’t need a state-sized hammer to whack the heads of these people … I was excited to hear this bill and I’m very disappointed to see Section 2 and Section 3 in there.”

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