Hennepin County eyes taxes, borrowing to pay for services for homeless people

Hennepin County officials are looking to spend more than $200 million over the next five years to tackle homelessness and affordable housing, one of its most aggressive plans yet to tackle persistent housing problems in the state's largest county.

Commissioners plan to look at raising property taxes, borrowing money, and using state and federal COVID relief aid to pay for the initiatives. The county is considering asking the Legislature to approve a countywide sales tax to pay the debt for new affordable housing.

This would be the first time county officials have considered selling bonds to pay for affordable housing.

"If Hennepin County can bond for stadiums, we can and should consider bonds for affordable housing," said Commissioner Chris LaTondresse, referencing the county's decision in 2006 to borrow $350 million for the new Twins stadium.

The board reviewed 11 recommendations during two lengthy briefings over the past week. They included nearly $10 million for emergency rental assistance, $3 million to allow shelters to be open 24 hours a day all week and $31 million to lower rents for county housing.

Less costly recommendations range from eliminating the small fee that shelters charge homeless clients each night, which would help about 700 families a year, to hiring 24 new case managers to help connect chronic shelter users with stable housing.

County officials do not have immediate plans to ask the Legislature to impose a new local sales tax, but Republicans who control the Minnesota Senate have taken a dim view of raising taxes coming out of the pandemic. They note that the $1.9 trillion American Rescue Plan signed by President Joe Biden this week sends about $2.1 billion to Minnesota local governments.

"We know an economic recovery from COVID-19 is a Minnesota priority that can be done without tax increases," said Senate Majority Leader Paul Gazelka, R-East Gull Lake.

Commissioner Jeff Lunde said he considers money for emergency rental assistance a top priority. The county has had an eviction moratorium during the COVID-19 pandemic, but it is not clear if that will remain in place once the virus lifts.

More than 45% of renters are at risk of eviction, but landlords don't want to force tenants out, he said.

"Landlords have to pay their bills and they don't want to turn their buildings back to the banks," he said.

LaTondresse, a former vice chairman of the Hopkins school board, said he is laser-focused on housing because the greatest predictor of student success is stable housing.

More than 11,000 homeowners are delinquent on their mortgages, said County Administrator David Hough.

Homelessness remains a key focus of the proposals.

The county wants to make it easier for homeless people to enter shelters; offer employment and training services; and potentially spend $97 million over the next 10 years to build 1,500 units of single-room occupancy housing.

The county spent millions in federal funding to buy motels and hotels in Minneapolis and Bloomington to house the homeless who might have been susceptible to COVID-19, waiting for test results or recovering from the virus. Money was also used for rental assistance and shelter improvements. Officials said they expect more federal money to pay for COVID-related services this year.

LaTondresse said the county spends $146 million annually for building and operating costs, creating and preserving affordable housing, and services to help people find and maintain housing. The county creates or maintains 1,100 units of affordable housing annually and provides services or aid to another 23,000 households.

Of the nearly 500,000 households in the county, about one-third of them are considered financially burdened, which means more than 30% of their income is spent on housing, he said.

All the recommendations grapple with ways to reduce racial disparity. Housing affordability disproportionately impacts households of color, the commissioners were told at a Thursday briefing. Nearly 75% of people experiencing sheltered or unsheltered homelessness are people of color.

Since 2016, the number of people living in encampments across the county grew from 170 to 642 in early 2020. The county has earmarked more than $91 million to build 1,000 units of long-term supportive housing by 2030.

The board plans to spend much of the year examining the recommendations and possible budget impacts for its 2022 budget.

David Chanen • 612-673-4465