At its September board meeting, Minnesota Housing released a draft for what's known as the Affordable Housing Plan (AHP). This plan lays out the funding priorities for the coming year, and is the first AHP under the leadership of Commissioner Mary Tingerthal. Learn more about this plan below, and by participating in an MHP webinar to be held Monday, October 24 featuring Commissioner Tingerthal.
While much of the spending for the plan, which runs from October 2011 through September 2012, is programmed under federal or state directives, the 2012 draft reveals the priorities of the new commissioner as she guides the agency through a most challenging economy. Tingerthal has presented a one-year plan at this time, instead of the typical two year plan, so that she can reassess agency program approaches in this uncertain economic period.
The agency intends to adopt the plan at its next board meeting, October 27. While agency staff, particularly the commissioner, have spent considerable time gathering input on the need for housing resources across the state, interested parties still have the opportunity to make comments on the draft to the commissioner or board members prior to the adoption date.
The plan itself includes spending priorities and a discussion of how they align with the agency's strategic priorities, as well as research initiatives to inform the 2013 plan.
The plan proposes $658 million in spending, which is down only a little over 6% from the 2010-11 plan on an annualized basis. This amount was higher than many expected, given that the affordable housing market has been battered on a number of fronts: the financial markets have been rocky, state and federal legislative bodies are cutting funding, and a prevailing low interest rate undercuts the competiveness of agency mortgage loans. The sources for the funding are federal programs ($211 million, 32%), state appropriations ($59 million, 9%), sale of agency bonds ($290 million, 44%), and use of agency resources ($98 million, 15%).
Within the spending plan, one of the most important resource allocation decisions by the board is the use of agency foundation funds. Agency foundation funds are the portion of the agency's net earnings that can be used to make deferred loans and grants, as opposed to other agency funds, which must be loaned. The plan is making available $28.9 million under its foundation rules. This amount represents the entire remaining balance of the foundation; any amounts available for the 2013 plan would come from new earnings of the agency or repayment of deferred loans made out of the foundation account.
The draft plan also details how each expenditure aligns with the agency's strategic priorities, which include: creating new housing opportunities; preserving existing housing; addressing homelessness; and mitigating the impact of foreclosures.
While the majority of these expenditures align with standing programs of the agency, several initiatives included in the plan are new, or represent a new emphasis within existing programs and are highlighted below:
- Rental rehab deferred loans – a pilot program of $10 million for renovating rental housing in smaller Greater Minnesota communities.
- Conduit bond financing -- $20 million in bond financing to help owners preserve portfolios of federally assisted housing that cut across multiple jurisdictions.
- Home improvement loans for "underwater" owners -- $2.5 million in loans for owners with good credit, but with loans in excess of 110% of their home value (the limit under fix-up fund rules), in areas with concentrated foreclosure.
- Alternative financing -- $10.4 million for contract for deed or similar programs that help families with poor credit access an interim financing source to purchase a home while rebuilding their credit.
- Resident owned cooperative purchases of manufactured housing parks -- $6 million in loans to assist with purchase of parks.
- Preservation of rental housing -- $13 million of agency HOME funds to preserve rental housing with federal subsidies, reflecting a shift of resource types among various agency programs to better align compliance requirements with programs that can best support them.
In other notes related to use of agency resources, the draft plan mentions that $1.5 million for homelessness programs comes from previously allocated funds, and was part of the total $57.5 million in agency resources used to carry out the Plan to End Long Term Homelessness. Additionally, unlike in previous plans, the plan makes note that the agency will continue to support nonprofit organizations with a combination of HOME funds and agency resources for technical assistance and operating support.
Research initiatives in the plan are designed in part to help determine priorities for 2013, and include:
- A statewide housing needs assessment will incorporate data from the 2010 Census, surveys, and other sources. From this analysis the agency will identify housing needs in Minnesota for the next decade.
- Several initiatives to retool the state's approach to housing preservation, including developing a new affordable housing database incorporating housing financed through multiple state and federal programs; a preservation risk assessment tool (based on operating data from projects as well as economic trends); and online property reporting.
- Developing mechanisms to reduce energy use in rental housing, including providing owners data and benchmarks on energy usage of their properties.
- Related to its homelessness priority, analysis of the use of federal HOME funds for rent assistance for homeless or at-risk households. The agency will also explore strategies to increase the level of social service funding that can be used in conjunction with supportive housing.
- Devising new approaches to house seniors focusing on adaption of existing housing and non-age separated approaches (e.g., including one bedroom apartments in family-oriented tax credit projects).
- Reexamining home ownership financing in light of changes in the market and new federal rules. Related to this examination, and reflecting a reduced-resource environment, the agency will consider modifications to its down payment and entry cost assistance programs.
MHP will be hosting a webinar on Monday, October 24 featuring Mary Tingerthal to facilitate understanding and feedback about the Affordable Housing Plan. Click here for more information and here to register.