Proposal would provide Greater MN $6 million for workforce housing

Small and mid-sized Greater Minnesota cities could get more help in building sorely needed rental housing for middle-income workers.

HF619, sponsored by Rep. Dean Urdahl (R-Grove City), would appropriate $6 million from the General Fund during the 2022-23 biennium to the Minnesota Housing Finance Agency-run Workforce Housing Development Program.

The program provides matching funds for market-rate rental housing projects outside the Twin Cities metropolitan area, prioritizing areas with populations below 30,000.

The bill, which would allow grants to cover 50% of project costs instead of 25% of costs, was laid over Thursday by the House Housing Finance and Policy Committee. Its companion, SF752, is sponsored by Sen. Jim Abeler (R-Anoka) and awaits action by the Senate Housing Finance and Policy Committee.

Modestly priced housing, critical to attracting workers, is in short supply in many rural cities, according to the Greater Minnesota Partnership.

Many middle-income workers earn too much to qualify for income-restricted housing but not enough to build homes, and rising construction costs prevent developers from building new apartments, the organization says.

Todd Peterson, Roseau's community development coordinator, said the Workforce Housing Development Program was crucial to building the city's only new rental housing in the last 10 years.

He and others said allowing grants to cover larger proportions of projects could make the program more accessible to more cities.

According to the League of Minnesota Cities, the Workforce Housing Development Program has led to the construction of 380 new rental units in Greater Minnesota. The Minnesota Housing Finance Agency expects to award $1.5 million in grants and loans in 2021.