U.S. Treasury Secretary Janet Yellen unveils $100M affordable housing fund while in Minneapolis

Not a single state in the country has enough affordable housing to meet the needs of low-income renters, U.S. Treasury Secretary Janet Yellen said in Minneapolis on Monday.

Yellen, meeting with politicians and business leaders Monday and Tuesday, announced a new $100 million fund to subsidize financing for affordable housing.

“Here in Minnesota, Black households are six times more likely than white households to be precariously housed,” said Yellen, the former chair of the Federal Reserve.

The new $100 million fund would boost the Federal Financing Bank’s financing of affordable housing and other measures over three years. Yellen also noted the Biden administration support of the construction of affordable rental housing through the Low-Income Housing Tax Credit.

“This new program will be primarily focused on increasing the supply of affordable housing,” Yellen said. “We look forward to designing it over the coming months to make sure that we are putting these new funds to their most effective use.”

Nationally, there is a shortage of more than 7 million affordable homes for the more than 10.8 million extremely low-income U.S. families, according to the National Low Income Housing Coalition. And there is no state or county in the country where a renter working full-time at minimum wage can afford a two-bedroom apartment, according to the group.

The announcements came as attention to the housing crunch and shortage of affordable housing becomes a growing issue in this year’s presidential election campaign.

Diane Yentel, president and CEO of the National Low Income Housing Coalition, said the White House has made efforts to prevent evictions and address the housing crisis, “but there is much more work still to be done.”

Yellen delivered remarks Monday following a tour inside one of the city’s Family Housing Expansion Project, or FHEP, apartment units. The project, which was completed in 2023, is the largest new-unit housing project in 20 years developed by the Minneapolis Public Housing Authority and consists of 84 units across 16 apartment buildings citywide.

“Housing is the first thing people need in order to be healthy,” said Sen. Tina Smith, who joined Yellen along with fellow Democrat Minneapolis Mayor Jacob Frey.

Yellen emphasized the importance of efforts aimed at fueling the development of more affordable housing and credited Minneapolis with serving as an example of “strategically leveraging” federal policies and programs to build needed housing.

“To get more affordable housing, you have to allow for it,” Frey said. “Previously we had a system that was set up that, by and large, kept all of the affordable housing in just a couple of locations throughout Minneapolis.”

Frey pointed to the city’s push for the long-fought 2040 Plan, which included a provision to boost inclusionary zoning and allow for the construction of multifamily housing.

On Tuesday, Yellen is set to hold a roundtable with Sen. Amy Klobuchar and small business owners about Community Development Financial Institutions.

The supply crunch of both affordable rentals and already owned homes for sale has raised prices.

“This supply crunch has led to an affordability crunch,” she said

Biden’s budget proposal calls on Congress to provide a tax credit for first-time homebuyers and includes a plan to build more than 2 million homes. It would expand the Low-Income Housing Tax Credit.

Includes reporting from the Associated Press.