01-08-2025 Workshop Packet - Laserfiche WebLink

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State funding is a major and necessary component for the provision of housing. Current resource levels are insufficient to meet the spectrum of needs in the metropolitan region and across the state. Primarily through programs administered by the Minnesota Housing Finance Agency (MHFA), the state establishes the general direction and prioritization of housing issues, and financially supports a variety of housing, including transitional housing, privately and publicly owned housing, supportive housing, senior housing, workforce housing, and family housing. Minnesota’s low-income rental property classification, commonly known as class 4d(1), allows landlords to certify qualifying low-income rental property. The state must continue to be an active partner in addressing life cycle and affordable housing needs. Any program expansion proposals for state mandated class-rate reductions should include a full analysis of the impacts to local property tax bases before their enactment. Metro Cities opposes any changes to the 4d(1) program that substantially increases the tax responsibility for residents and businesses or increases the tax benefit for landlords without including increased benefits for renters of 4d(1) units. Metro Cities supports a property owner being required to receive city approval where the property is located, for all 4d(1) property that has not in whole or in part been classified as 4d(1) property. Metro Cities also supports ongoing 4d(1) aid, and lowering the threshold of eligibility for cities to receive 4d(1) aid. Metro Cities supports the continuation of a reporting process for landlords benefitting from the 4d(1) class rate reduction to ensure deeper affordability or property reinvestment, and a sunset period for any changes made to the program to evaluate the range of impacts that expanding the program may have. Workforce housing is generally defined as housing that supports economic development and job growth and is affordable to the local workforce. A statewide program, administered through the Minnesota Housing Finance Agency, supports workforce homeownership efforts in the metropolitan area. State policies and funding should recognize that affordable housing options that are accessible to jobs and meet the needs of a city’s workforce are important to the economic competitiveness of cities and the metropolitan region. In addition, significant housing related racial disparities persist in Minnesota, especially as it relates to the percentage of households of color who pay more than 30 percent of their income in housing costs and as it relates to the significant disparity gap in homeownership rates. A 0.25% metropolitan area regional sales tax enacted in 2023 provides Local Affordable Housing Aid (LAHA) to cities over 10,000 in population in the metropolitan region, and cities received the first distribution of LAHA in 2024. A report to the Minnesota Housing Finance Agency on LAHA uses and expenditures is due on December 1, 2025, and every year thereafter. Given the variability in sales taxes collected each year, Metro Cities urges the Legislature to consider extending the timeline in which cities must expend funds. Metro Cities further supports having funds be considered expended if they are deposited into a local housing trust fund, which provides flexibility for cities in maximizing public resources for housing projects. Metro Cities supports a sunset to the LAHA reporting requirements, including reporting on locally funded housing expenditures. 45