Council housing grants fill critical funding gaps

Program helps create housing for families earning moderate and low incomes

Pulling together the resources to build new housing that is affordable to families earning less than the Twin Cities area median income — $46,500 in 2005 – is tough. Just ask any city or developer who is trying to do it.

One tool that has made a difference in the seven-county region is what is called “gap financing” from the Metropolitan Council. The funding, from the Local Housing Incentive Account (LHIA) of the Council’s Livable Communities program, fills small but critical gaps in the funding needed to complete new affordable housing or housing rehabilitation projects.

Rental townhomes at Northstar Ridge in Coon Rapids are affordable to families earning between 30 and 50 percent of area median income.

Since 1996, the Council has invested more than $15 million through LHIA to help create affordable and lifecycle housing. Results of finished projects and expected outcomes of those in development include:

1,890 new rental units, including 1,625 units affordable to lower-income households
638 rehabilitated affordable rental units
565 new affordable ownership units
250 rehabilitated affordable ownership units
Home improvement loans to more than 1,100 homeowners

In the last 10 years the Council has provided 95 LHIA grants to local governments, counties and multi-agency partnerships in the region, in total benefiting 50 communities. The grants have leveraged $392 million in total public and private development investments.

LHIA gap financing supports infill projects that are revitalizing inner-city communities and redevelopment that is renewing older suburban neighborhoods. LHIA funding has also gone to new town centers that create links between retail, commercial and public spaces for residents, and provide additional housing with easy access to transit and restored trails, parks and greenways.

Dakota County Community Development Agency, with support from an LHIA grant, developed 34 rowhouse-style townhomes in Burnsville’s Heart of the City development. The townhomes rent to families that meet income limits.

Local officials support the program

One fan of the program is Mark Ulfers, executive director of the Dakota County Community Development Agency. “It takes a number of financing resources to make housing affordable to families who earn less than median income,” Ulfers said. In Dakota County alone, “LHIA grants were critical to projects that have provided workforce housing for 294 moderate-income families.”

One of those projects, constructed in a prime redevelopment area of Burnsville, is called “Heart of the City.” The mixed-use development includes a variety of housing types, a town center, new streets and landscaping, a transit facility and a future performing arts center. LHIA funding helped make 34 townhomes in the project affordable.

“We know working families are important to our community, to our employers and to the vitality of our economy,” said Mayor Elizabeth Kautz, “so we wanted diverse housing products. These homes were built with high-quality materials and construction. They contain architectural design features that complement the overall development – I’m really proud of the entire project.”

In Chaska, LHIA funding helped secure 24 affordable single-family homes, five of them constructed through Habitat for Humanity, in the East Creek Acres development. “Chaska believes it is important to provide choices in housing, and to offer quality homes that an ‘average’ person can afford,” said Kevin Ringwald, director of community development. “East Creek Acres provides a mix of affordable housing, both rental units and detached single family homes. We pooled the collective knowledge and resources of the Carver County HRA, the city staff, John Duffy (the developer), and Habitat for Humanity to create a great product that has since led other developers to construct homes in an area that really needed the investment.”

East Creek Carriage Homes in Chaska provide affordable rental housing for large families earning 50 percent of median income.

In Coon Rapids the 54-unit Northstar Ridge development, another notable project, features access to the planned Northstar Commuter Rail Line. Families earning half or less of the median income can afford rental townhomes units made affordable with the help of an LHIA grant.

Communities set affordable housing goals

In order to be eligible to compete for LHIA funds, local communities must negotiate long-term affordable and lifecycle housing goals with the Council, and put in place a plan to accomplish the goals. In 2006, 106 communities in the region chose to participate. If all the community goals set since 1996 are accomplished, by 2010 the region will have added 48,000 rental units and 17,000 affordable rental units, as well as 89,000 affordable ownership units.

The Council allocates LHIA funds through the Metropolitan Housing Implementation Group (MHIG), established in 1995 to coordinate and streamline the complex system for delivering housing resources in the region. The MHIG includes representatives of the Council, the Minnesota Housing Finance Agency and the nonprofit Family Housing Fund. Communities, developers, housing agencies and others interested in producing affordable housing need apply only once to access the variety of funds available in any given funding cycle. The MHIG reviews the applications and determines how to allocate the available funding.