Yesterday, the Minneapolis Board of Estimate (BET) voted to approve a $5 million MPHA housing tax levy for Fiscal Year 2024, in line with the long-term funding agreement announced last month. Last week, MPHA staff presented to the BET a five-year capital plan detailing the agency’s intended uses for a $5 million annual housing levy and answered a variety of questions on the plan.
These plans target both preservation and new-unit production, as well as health, safety, code compliance, and quality of life improvements. All told, this plan enables MPHA to address at least $25 million in current and upcoming capital needs while paving the way for long-term preservation of approximately 500 units. Additionally, the plan also supports the potential creation of 100+ new units and includes capital improvements targeting top concerns of MPHA residents.
“I commend the BET for restoring the MPHA levy and going farther than ever before to help address the affordable housing shortage in Minneapolis,” said Abdi Warsame, Executive Director/CEO of the Minneapolis Public Housing Authority. “To put in context how significant this new funding is, MPHA received about $20 million from HUD in 2022 to support the agency’s capital improvement work. This new, annual funding proposed by Mayor Frey and now approved by the BET provides the agency with a 25 percent boost to annual capital funding. At a time where communities across the state are struggling to deliver affordable housing, Minneapolis leaders are making historic investments to preserve and produce the deeply affordable housing our city—and region—desperately needs.”
Historically, HUD has only provided about 10 percent of the funding necessary for major building improvements. That means each year the agency is forced to choose temporary fix options to triage leaky roofs, repair crumbling brick façades, replace damaged 60-year-old windows, or improve decades-old high-rise electrical and plumbing systems instead of more comprehensive solutions. Over time, this problem has compounded, creating the agency’s current capital backlog of $229 million in needs—a problem that is only getting worse.
Knowing Washington won’t solve the agency’s funding problems any time soon, MPHA staff have pursued and maximized nearly every tool possible to address this problem. This includes seeking special budget permissions from HUD to develop localized solutions, creating new public-private partnerships to leverage debt financing for major renovation projects (while maintaining strong guardrails to protect residents and public ownership), accessing project-based funding supports at every level of government, and pursuing one-time and ongoing financial supports from state and local governments.
And while MPHA has secured tens of millions in funding supports with this “all-of-the-above” approach, it has not been enough. With this new $5 million housing levy from the City of Minneapolis, the agency gets one step closer to closing the funding gap to the resources it needs. This new agreement also provides the certainty that the City of Minneapolis is committed to partnering with MPHA as the agency seeks to build new and expanded partnerships across the state and region to help house Minneapolis’ most vulnerable populations.
Beyond the magnitude of this new funding and the impact it will have on MPHA’s preservation and production activities, it enables the agency to accomplish a variety of second objectives, including: creating new accessible units, installing energy efficient and green energy technologies, create new housing for the previously homeless and unsheltered, and spending millions of dollars in contracted work with minority- and woman-owned businesses and Section 3 low-income vendors.
