The November meeting of Minnesota Housing included two major items: issuing bonds so that the Agency can continue to make loans available to low-income buyers through March of 2012, and awarding funds in the Agency's biggest round of awards for the year. $55 million in funds were awarded to projects throughout the state.
Board Okays Selling Bonds to Finance Home Purchases, Future Unclear
The board approved selling $260 million in bonds at year-end so that Minnesota Housing can continue to make competitive loans to low-income homebuyers. By selling bonds, the agency raises funds so to purchase mortgages to finance home purchases by low-income borrowers. For this bond issue, agency staff explained, the remaining resources from the agency's New Issue Bond Program (NIBP) capacity have been committed. The NIBP, which is managed by the US Treasury, has kept state finance agency mortgage programs competitive and viable during the current financial crisis, as market interest rates have fallen to record lows. Through the NIBP, the federal government pledged to purchase about half of a state's housing bonds at a low rate. With this latest bond issue, Minnesota Housing will be able to acquire new mortgages through the first quarter of 2012. Commissioner Tingerthal expressed that she is not sure whether agency mortgages will remain competitive beyond that point, since Congress is not expected to commit more funds to NIBP.
$55 Million Awarded for Housing Development
The Super RFP vote by the board, which is the annual award of funding for multi- and single-family housing developments by Minnesota Housing and its funding partners, represents a key milestone in the annual funding cycle of the agency. With the Super RFP vote, the agency approved $55 million in funding, which will support the development or renovation of 2,400 housing units in Minnesota.
Funding includes 608 newly constructed and 838 rehabilitated affordable rental units, as well as 490 affordable units for home ownership. Of the rental units, 64 are designated for homeless people.
In the lead-in to discussion of the project awards, staff reviewed for the board the information and process that led to the funding recommendations. In making the recommendations, staff emphasized their use of data from the twenty-four community indicators to help guide decision making. Staff said that this RFP process is becoming more data-driven each year.
Commissioner Tingerthal said the agency does well in distributing RFP funding across the state. To understand their funding distribution, staff examine project award data over a five-year reporting period, since single projects can distort numbers if the analysis is confined to a single year. She noted that all regions of the state were similar, as measured by dollars awarded per population, with northwest Minnesota running a bit ahead of the average, and the central and northeast parts of the state running a bit under the average.
In presenting multi-family recommendations, staff told the board that the agency was facing a "dramatic decrease" in state and federal funding. More projects are being supported in this funding round, however, because of the significant rise in the value of housing tax credits. Never in the seventeen years that the agency has administered the tax credit program, have so many projects been awarded tax credits that needed no additional state subsidy funds, staff reported.
In a rare occurrence, a community member spoke to the board in opposition to an affordable housing development. Eric Rodel said that he was representing 200 petition signers and others who objected to the development of Pillsbury Commons in Richfield. Rodel said that the multi-family project would hurt the small town feel of his neighborhood. Other concerns, Rodel continued, were that the proposed project lacked access to public transportation and, due to its proximity to railroad tracks and busy streets, would not be safe for children. Besides, he said, the project required 4 of 5 Richfield city council members to support a zoning change and two have said that they would not support a rezoning.
The board responded to Rodel, stating that while he was welcome to speak at the agency meeting, the agency does not have the role of making decisions about local matters such as zoning. They recommended that he take his concerns to the city of Richfield. The board added that its review was based on criteria applied to all projects.
In response to a board member's question, staff said that the project cost for Pillsbury Commons was well within what the agency allows. Staff was also asked about the length of time agency resources would be tied up if this project were not able to proceed. Staff replied that it would be a little over a year until the resources would go back into the agency's funding pool if the project stalled. The board then approved all staff recommendations, including the Richfield project.
For single family (home ownership) housing projects, staff pointed out that approximately 40% of the homes are projected to be occupied by households of color. Most of the funding went to treating foreclosed properties, though some new construction units were also funded. Chair Ken Johnson asked why more funding did not go to St. Paul. Staff responded that very few project proposals had been submitted from St. Paul.
The list of awards made in the Super RFP process can be found at http://mnhousing.gov/about/updates/index.aspx.