With MN short on housing, bill would push production to increase homeownership

The housing shortage has led some potential homeowners to continue renting even when they have means to be approved for mortgages.

Lawmakers want to increase the housing inventory to spur more homeownership.

Sponsored by Rep. Hodan Hassan (DFL-Mpls), HF3966 would establish a homeownership investment grant program, add more down payment assistance for first-time homebuyers and create a revolving fund for manufactured homes.

The bill, as amended, was laid over Tuesday by the House Housing Finance and Policy Committee for possible inclusion in an omnibus bill. Its companion, SF3677, is sponsored by Sen. Rich Draheim (R-Madison Lake) and awaits action by the Senate Housing Finance and Policy Committee.

“When we have 27,000 families across the state who can afford homeownership but continue to rent on our most affordable housing stock, and one of the worst racial homeownership disparities in the country, we know it’s beyond time to stop the hand-wringing and scale up the strategies that work,” Hassan said.

She said the focus is creating more entry-level home inventory so families can move toward ownership instead of renting.

The bill would appropriate $120 million in fiscal year 2022 to Minnesota Housing for a homeownership investment grant program that would fund nonprofit community development financial institutions in Minnesota that serve low-income households. Funds would go toward housing development, rehabilitation, and financial assistance of low- and moderate-income households.

An additional $45 million in fiscal year 2022 would go to Minnesota Housing for the workforce homeownership program. It would also increase the annual base appropriation for the program from $250,000 to $15.25 million.

The bill would establish a homeownership production acceleration program with a $10 million appropriation in fiscal year 2022 to nonprofit organizations to hire contractors, consultants and staff to support housing production, and to provide training and technical assistance for the organizations.

Build Wealth MN would receive $2 million for a family stabilization program.