The time is right to close the wealth gap, say legislators in favor of a $50 million fund to support emerging developers who lack access to capital and networks that can tip the balance to a project’s success.
HF2976 would create a revolving loan fund to establish no- or low-interest loans of up to $50,000 for predevelopment and up to $500,000 for a short-term bridge loan.
The House Workforce and Business Development Finance and Policy Committee laid the bill over Monday for possible omnibus bill inclusion.
“It’s about creating capital and providing access to those who have been left out,” said Rep. Mohamud Noor (DFL-Mpls), the bill sponsor and committee chair. “This is a timely discussion because we are talking about inequities that exist in our system. We’re talking about providing opportunities.”
The fund would be accessible to people who have been traditionally left out of real estate development – minorities, those with low-income, women, and someone with a disability.
Among the intended projects are ones in disadvantaged communities, underserved by traditional developers, or that would increase the availability of affordable housing.
The state has gaps in education, income and opportunity, said Rep. Jim Davnie (DFL-Mpls), who argues that a gap in wealth is behind all of them. Closing that gap, he said, is fundamental to building a more equitable, dynamic and successful Minnesota.
“This is the right investment to make and the right time to make this investment,” Davnie said, shortly after the state’s projected $9.25 billion budget surplus was announced.
Bill supporters also spoke highly of including hard-to-find predevelopment funds, which are used for things like site inspections, city entitlements, ecological reviews or architectural and engineering fees. Those often need to be done before a developer is eligible for grants or tax credits.
Nawal Noor, CEO of Noor Companies, a real estate developer and general contractor, talked about needing $2.5 million in liquid assets for a $10 million housing project.
Damaris Hollingsworth, principal architect for the firm Design By Melo, said the majority of the projects she’s been working have needed $150,000 in predevelopment costs. Larger established firms can carry those costs in a way that her company cannot afford to.
Rep. Rod Hamilton (R-Mountain Lake) indicated support for the concept, thinking the Department of Agriculture’s revolving loans for farmers might be a good model. But he expressed concerns about too many administrative layers and costs.