This month's meeting of the Minnesota Housing Board included a legislative update and final approval of the scoring criteria for 2017 low income housing tax credits. The board approved several changes in downpayment and closing cost assistance to help reach more homeowners. Board members also approved two new contracts using HUD 811 resources, which offer project-based rental assistance for people with disabilities.
Legislative update: the good and bad
Commissioner Mary Tingerthal updated the board on what she called the good and bad news of Agency requests at the legislature. In good news, he governor’s bonding proposal, recently released, includes $10 million for public housing and $40 million for housing infrastructure. On the other hand, she added, the House proposal cuts the Agency’s base budget by $10.5 million. She was equally concerned about policy changes in the House bill: the Indian set-aside within the Challenge program would be eliminated, and there would be no income limits on the one-half of Challenge program funds to be earmarked for workforce housing in Greater MN. The Senate housing proposal was much kinder to the Agency, she said, free of harmful policy proposals and with a budget $16.4 million higher than the base budget (and $3.5 million higher than the governor’s proposal).
Tingerthal said that both the House and Senate proposals included funding for Greater Minnesota workforce housing that would be administered by the Department of Employment and Economic Development (DEED). Board members asked whether DEED wanted this funding; Tingerthal responded that DEED told the legislature that housing funds should go to Minnesota Housing.
Final 2017 tax credit scoring criteria approved
The board approved staff’s final recommendation for 2017 low income tax credit scoring criteria, known as the Qualified Allocation Plan (QAP). In presenting the recommendations, Kayla Schuchman, the lead staff-person for the tax credit program, stated that a number of changes to the QAP draft had been made as a result of comments received by the Agency. She characterized the comments as thoughtful and a crucial part of the QAP process. In the changes, the Agency clarified what it will be looking for in awarding points under the criterion "conformance to local plans." A number of modifications were made in support of rural communities, including eliminating the need to prove economic integration to receive points under that category. In spite of negative comments about using the formal WalkScore system to determine locational efficiency points, staff did retain WalkScore. However, the threshold for rural communities to receive points was lowered. Chair John DeCramer congratulated staff for making good strides in easing concerns, and emphasized the importance of communicating these changes to smaller communities.
Commissioner Tingerthal said that this would be the last board meeting for Bob Porter, a member of the tax credit team, who is retiring after twenty years with the Agency.
Home ownership loan growth and downpayment assistance
Several board items concerned a significant growth in demand for the Agency’s home ownership loans. The board was told that the rate of Agency lending was twice what it was in 2014. Staff said that demand might be caused by low interest rates and the relative affordability of homes in many Minnesota markets.
With the growth in home loans, the board agreed to staff’s recommendation to put more funds into downpayment assistance. To stretch available resources, the board also agreed to changes in the Deferred Payment Loan and Monthly Payment Loan programs, both of which provide downpayment and closing cost assistance to first-time homebuyers. The deferred loan offers interest-free loans that extend through the term of the primary mortgage and serve households with a median income of $44,000. The monthly payment loan offers ten-year amortizing loans, and recipient households have a higher median income of $66,000. The program changes approved were decreasing the maximum interest-free deferred payment loan from $7,500 to $6,000, and decreasing the maximum amortizing monthly payment loan from 5% of the primary loan amount to a flat $7,500.
Contracts for new HUD 811 funds approved; more proposals sought
The board approved contracts for two properties in Duluth and Chaska for the new demonstration HUD 811 funds available to Minnesota. The HUD 811 program provides project-based rental assistance for disabled individuals. No more that 25% of units in any property can be funded through this program. While 85 units could receive these subsidies under the program demonstration, the two contracts approved by the board will provide subsidies to only 12 units. Staff reported that in the hot rental market, owners are less interested in a funding program which is bound by the thirty-year use restrictions of the 811 program. Staff said that they will actively reach out, particularly to mission-oriented agencies, to place the remaining subsidies.
