Item Description:
title
Increase the 2024 Local Affordable Housing Aid Fund budget by $10,000,000; transfer $10,000,000 to HED; supp app of $10,000,000 and 8.0 FTEs to 2024 HED budget
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Resolution:
body
BE IT RESOLVED, that the 2024 Local Affordable Housing Aid Fund (Fund 24) revenue and interfund transfer out budget be increased by $10,000,000; that an interfund revenue transfer in the amount of $10,000,000 to the General Fund Housing and Economic Development department be authorized; that the 2024 General Fund Housing and Economic Development department interfund revenue transfer in and expenditure budget be increased by $10,000,000 and 8.0 FTEs for programming of the Local Affordable Housing Aid revenue; and that the Controller be authorized to transfer and disburse funds as directed.
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Background:
The 2023 Minnesota Legislature approved historic levels of new state funding for housing. The first is the new 0.25% metro area sales and use tax for housing (Minnesota Session Law 2023, Chapter 37, Article 5). The Metropolitan Council imposed this new tax, effective October 1, 2023. The Department of Revenue will administer the regional sales tax on behalf of the Metropolitan Council, as well as administer the distribution of sales tax funding to eligible entities as Local Affordable Housing Aid.
The second is the Statewide Affordable Housing Aid (Minnesota Session Law 2023, Chapter 64, Article 4, Section 24). The legislature approved an annual appropriation of $6.8 million under this program for counties, and an additional $8.5 million for counties in 2024 and 2025. Hennepin County is expected to receive $1.7 million a year from this state revenue source.
Together, these new dedicated funding sources for local affordable housing aid will generate an estimated $10 - $20 million per year for Hennepin County. While state agencies continue to develop required guidelines and regulations for the use of sales tax proceeds, county staff anticipates initial receipts beginning in July 2024.
Resolution 23-0438 (adopted November 28, 2023) affirmed Hennepin County’s strategy for Metropolitan Region Sales and Use Tax for housing proceeds (Local Affordable Housing Aid) and Statewide Affordable Housing Aid revenues (collectively “Local Affordable Housing Aid Fund”):
1. Emergency rental assistance - Ongoing eviction prevention program modeled after the COVID-era efforts, providing assistance at Housing Court.
2. Affordable rental housing: repair+grow capacity - Support to repair and build the capacity of affordable housing developers and owners.
3. Supportive housing operating - Capitalizing Supportive Housing projects to deliver the wrap-around services that residents need to be successful in the projects receiving Supportive Housing capital funds.
4. Affordable rental housing: increase production - Deferred financing to create affordable rental housing.
5. Homeownership opportunities and preservation - Affordable homeownership opportunities, and home improvements for climate resilience.
|
Implementation years |
2024 |
2025 |
2026 |
2027 |
2028 |
|
Emergency rental assistance |
$$ |
$$ |
$$ |
$$ |
$$ |
|
Affordable rental housing: repair + grow capacity |
$$$ |
$$$$ |
|
|
|
|
Supportive housing operating |
|
|
$$$$ |
$$ |
$$ |
|
Affordable rental housing: increase and accelerate production |
|
|
$$$ |
$$$$$ |
$$$$$ |
|
Homeownership opportunities |
|
|
$ |
$ |
$ |
|
Homeownership preservation |
|
|
$ |
$ |
$ |
Activity implementation will be subject to competitive selection processes and future board approvals (where appropriate).
Resolution 23-0349R1 (adopted December 12, 2023) created Fund 24 as a Special Revenue Fund for Local Affordable Housing Aid, for the receipt and expenditure of Local Affordable Housing Aid (funded by the metro area sales and use tax for housing revenues) and of Statewide Affordable Housing Aid revenues.
The 2024 budget for Local Affordable Housing Aid includes $5 million for the Health and Human Services/Housing Stability division. Through February 2024, approximately $409,000 has been expended on emergency rental assistance.
The Housing and Economic Development (HED) department is preparing to release the “Affordable rental housing: repair+grow capacity” Request for Proposals (RFP) in Summer 2024 (with expenditures before the end of 2024). Funds will help developers and owners further recover from impacts of the pandemic and recession, and grow capacity to sustain and create new affordable housing.
As part of its ongoing preparation for this expanded programming, HED requests a supplemental appropriation of $10,000,000 and the addition of 8.0 new FTEs to its 2024 budget.
Once normalized, staff projects that housing sales tax receipts and appropriations will assist over 1,200 additional households/units in Hennepin County annually.
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|
Fund |
Department/ Dept. ID/Project # |
Account/ Source |
Amount |
FTE |
|
Revenues |
24 |
Local Affordable Housing Aid Fund |
Local Affordable Housing Aid 41924 |
$10,000,000 |
|
|
|
24 |
Local Affordable Housing Aid Fund |
Transfer To Other Funds 49994 |
($10,000,000) |
|
|
|
10 |
Housing and Economic Development 124003/1010900 |
Transfer From Other Funds 49994 |
$10,000,000 |
|
|
|
|
|
Total |
$10,000,000 |
|
|
|
|
|
|
|
|
|
Expenditures |
10 |
Housing and Economic Development 121100/124200 |
Personnel Services 500XX |
$1,000,000 |
8.0 |
|
|
10 |
Housing and Economic Development 124003/1010900 |
Repair + Grow Services 52903 |
$9,000,000 |
0.0 |
|
|
|
|
Total |
$10,000,000 |
8.0 |
Current Request:
Increase the 2024 Local Affordable Housing Aid Fund (Fund 24) revenue and interfund transfer out budget authority by $10,000,000; transfer interfund revenue of $10,000,000 to Housing and Economic Development department (Fund 10); increase the 2024 Housing and Economic Development department revenue and expenditure budget by $10,000,000 and 8.0 new FTEs.
Impact/Outcomes:
Metropolitan Region Sales and Use Tax for housing proceeds and Statewide 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 percent of area median income. This request helps guide how best to use county programming to reduce disparities by removing barriers.
recommendation
Recommendation from County Administrator: Recommend Approval