Item Description:
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Provide a supplemental appropriation of $490,000 for emergency rental assistance, funded with the housing sales tax (Local Affordable Housing Aid)
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Resolution:
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BE IT RESOLVED, that the 2024 revenue budget for Local Affordable Housing Aid (Fund 24) be increased by $490,000, and that an interfund transfer in the amount of $490,000 to the Human Services and Public Health department (Fund 20) be authorized; and
BE IT FURTHER RESOLVED, that the 2024 revenue and expenditure budget for the Human Services and Public Health department be increased by a $490,000 supplemental appropriation for emergency rental assistance for households at risk of eviction.
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Background:
The 93rd Minnesota Legislature approved historic levels of new state funding for housing, including a first-ever sales and use tax dedicated to affordable housing, and annual appropriations to the new Statewide Local Affordable Housing Aid fund. This fund will allocate an estimated $31 million per year to Hennepin County. County staff developed an implementation framework tailored to leverage Hennepin County’s unique program-based strengths and strategies to address our deepest racial disparities in housing.
State statute outlines three categories of eligible projects for both new revenues in the Metro area:
• Emergency rental assistance <80% AMI
• Financial support to nonprofit affordable housing providers in their mission to provide safe, dignified, affordable and supportive housing
• Construction, acquisition, rehabilitation, demolition or removal of existing structures, construction financing, permanent financing, interest rate reduction, refinancing, and gap financing of affordable housing (homeownership projects <115% AMI; rental < 80% AMI)
In addition, state statute defines funding priorities for both new revenues: affordability (homeownership <80% AMI, rental < 50% AMI); reduce disparities in homeownership; reduce housing cost burden, housing instability, or homelessness; improve the habitability of homes; create accessible housing; or create more energy- or water-efficient homes.
The primary intent of these new funding sources is to increase production of affordable housing in the metropolitan area. To do so, staff propose applying new Metropolitan Region Sales and Use Tax for housing proceeds and Local Affordable Housing Aid to proven county strategies along the affordable housing continuum:
• Emergency renter assistance
• Supportive housing capital
• Supportive housing operating
• Single room occupancy housing
• Preservation of naturally occurring affordable housing (NOAH)
• Affordable housing production accelerator
• Homeownership assistance.
This approach applies the disparities reduction framework and goals and uses program infrastructure already tested through the pandemic. Since this is a new permanent source of revenue, staff recommends a multiphase approach to both meet immediate needs, and to pave the way for long-term impact. Consistent with Attachment A:
1. Launch a new permanent eviction prevention fund. This will continue the successes of the COVID-era eviction prevention, helping at Housing Court where it is needed most.
2. Repair and build the capacity of affordable housing developers. The region needs a healthy ecosystem of developers and owners to truly expand affordable housing production, but partners are still struggling to keep existing projects open.
3. Support community partners to deliver the wrap-around services that residents need to be successful in the projects receiving Hennepin County Housing and Redevelopment Authority’s (HCHRA) Supportive Housing capital funds.
4. Develop a healthy pipeline of housing projects, while also providing strategic investments to finish high priority projects quickly.
5. Advance disparity reduction and climate impacts in homeownership creation and preservation.
It is projected that housing sales tax receipts and appropriations will assist over 1,200 additional households/units in Hennepin County annually.
The Board affirmed this housing strategy with Metropolitan Region Sales and Use Tax for housing proceeds and Local Affordable Housing Aid funding on November 28, 2023 (Board Resolution 23-0438).
The 2024 budget for the Housing Stability division in Human Services and Public Health includes $5 million in housing sales tax to provide emergency rental assistance.
More than $4.5 million in LAHA/SAHA-funded emergency rental assistance has been administered so far in 2024 to help more than 1,000 households at risk for eviction preserve their housing.
Current Request: This request will increase the 2024 revenue budget for Local Affordable Housing Aid (Fund 24) by $490,000, authorize the interfund transfer of $490,000 to the Human Services and Public Health Department (Fund 20) as expenditures are incurred, and increase the Human Services and Public Health 2024 revenue and expenditure budget by a $490,000 supplemental appropriation to be utilized within the strategy of emergency rental assistance for households at risk for eviction.
Impact/Outcomes: Metropolitan Region Sales and Use Tax for housing proceeds and Statewide Local Affordable Housing Aid revenues are projected to assist over 1,200 households/units in Hennepin County annually once fully available/implemented.
Housing Disparity Domain: Households of color are disproportionately housing cost burdened at or below 50% of AMI. This request helps guide how best to use county programming to reduce disparities by removing barriers.
recommendation
Recommendation from County Administrator: Recommend Approval