Minneapolis Public Housing Agency wants to bring back tax it dropped 14 years ago

Minneapolis could resurrect a tax for public housing, under a proposal to be announced Wednesday.

The concept — a long-term funding source for public housing — has the support of a number of key players, though the likelihood of it happening remains unclear.

The proposal comes out of the Minneapolis Public Housing Agency (MPHA), which will roll it out publicly on Wednesday. It could bring in about $12 million next year to pay for a mounting backlog of building repairs and construction of new units, MPHA officials said.

The tax would cost the owner of a $315,000 home roughly $53 in additional taxes annually, according to estimates. Commercial properties would see similarly proportioned increases of up to an estimated 3%, according to MPHA estimates. If it went through, the new tax could appear on property tax bills as soon as 2024.

Why they want it

"Our city and region face an affordable housing crisis, and it's going to take an all-of-the-above approach to preserve and produce the housing our community needs," said Abdi Warsame, the housing authority's executive director and CEO, in a statement released in advance of Wednesday's rollout.

Warsame's argument is this: Without a sustainable influx of funds, the agency's $210 million-plus backlog will only grow, undercutting what is widely seen as a crucial tool to reducing homelessness.

Not only could the tax help the MPHA preserve its aging housing units, the agency could have enough funds over the next 20 years to develop more than 440 new units, a way to eat into its waiting list of those seeking housing.

While the MPHA has seen its funding boosted recently by federal pandemic-recovery funds and direct dollars from the city budget, those are one-time dollars. Advocates argue that public housing has been underfunded for decades by its primary benefactor, the federal government.

A proposal for $45 million from the Democratic-controlled Legislature has thus far failed to gain enough support to guarantee its passage, though it could still be approved in the final weeks of the legislative session.

In addition to administering some 7,200 federal Section 8 housing vouchers, MPHA owns and operates 6,000 low-income units in 42 high-rises, 184 low-income family homes, and more than 700 scattered-site "deeply affordable" homes for families, among other properties.

Warsame will make his pitch Wednesday in a presentation to the Minneapolis Board of Estimate and Taxation, which has the authority to set the maximum amount that city property owners can be taxed by various bodies.

Samantha Pree-Stinson, president of the taxation board, plans to host a news conference before the meeting where she will explain, she said, "why funding the public housing levy is critical."

Tricky politics

Under state law the MPHA is allowed to levy its own property tax, as do the vast majority of the 100 or so public housing agencies in Minnesota. The MPHA has taxed properties in the past; the last levy was in 2009 amid the depths of the Great Recession, and since then there have been numerous calls for it to be revived.

But the agency can't levy taxes without approval by the taxation board, the City Council and the mayor. And it's not necessarily permanent; the levy must be approved every year.

Generally speaking, there's broad support among council members and Mayor Jacob Frey to increase spending on public housing. But the politics of such a move are tricky.

"It's too early now to make a commitment," Frey said Tuesday, emphasizing that the city's annual budget process hasn't yet begun — and noting that the city's anticipated 6.2% property tax increase is effectively the starting point before additional tax burdens can be considered.

In a news release Monday, MPHA officials attempted to cast their plan as having overwhelming support on the City Council, listing the support of a "veto-proof nine members." But that purported support is based on how council members responded to a candidate questionnaire before the 2021 election, and not the specific plan now being proposed.