Item Description:
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Affirming Hennepin County strategy for Metropolitan Region Sales and Use Tax for housing proceeds and Statewide Local Affordable Housing Aid revenues
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Resolution:
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BE IT RESOLVED, that the Hennepin County Board of Commissioners hereby affirms the county’s housing strategy focusing on households with the lowest incomes to reduce racial disparities in homelessness and housing cost burden, and to increase access to greater economic opportunities; and supports deployment of Metropolitan Region Sales and Use Tax for housing proceeds and Local Affordable Housing Aid to proven strategies identified herein and attached hereto.
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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. The new 0.25% Metropolitan Region Sales and Use Tax for housing will raise an estimated $29 million per year for Hennepin County, and the Statewide Local Affordable Housing Aid will allocate an estimated $2 million per year to Hennepin County. While state agencies continue to develop required guidelines/regulations for the use of both revenues, staff has 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.
Once normalized, staff projects that housing sales tax receipts and appropriations will assist over 1,200 additional households/units in Hennepin County annually.
Activity implementation will be captured in future budgets and subject to competitive selection processes and board approval (where appropriate).
Current Request:
This request affirms the county’s housing strategies focused on households with the lowest incomes and supports deployment of Metropolitan Region Sales and Use Tax for housing proceeds and Statewide Local Affordable Housing Aid revenues consistent with the county’s disparities reduction framework and goals using program infrastructure already tested through the pandemic.
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