State leaders consider boost in housing aid as federal dollars dry up

The waiting room at the New American Development Center in Minneapolis was overflowing with people — and worry.

Nimo Osman held an eviction warning and a letter showing her December application for COVID-19 emergency rental assistance was still "pending initial review." Bushar Mohamed, who never imagined he would fall behind on rent, was hoping for a few more months of aid after losing his job at Dunwoody College of Technology. And Khadra Farah Hussein's $680 monthly rent bill left her wondering, "What can I do for food?"

As the dollars that have helped people across Minnesota during the pandemic run down, dozens of people continue to stop at the Minneapolis nonprofit daily to ask about the state's RentHelpMN program. State officials abruptly cut off new applications at the end of January when the crushing need ate up federal funding sooner than anticipated.

That left renters scrambling to piece together payments and lawmakers with some big-ticket questions as they start another legislative session: Should the state step in to cover rent? And what is the long-term solution?

House Democrats will present a plan this week to put an additional $300 million in federal pandemic relief dollars toward emergency rental assistance, said Rep. Mike Howard, DFL-Richfield. He estimated that would sustain people until June when the state is scheduled to lift the last remaining pandemic renter protection, which prevents a renter with a pending application for help from being evicted for failing to pay.

In addition to their plans for the one-time cash influx, some House DFL members are making their third attempt to pass a bill that would provide ongoing assistance to low-income Minnesotans who spend more than 30% of their income on rent. The bill is estimated to cost nearly $1.1 billion annually, though Howard said it could start at a lower level and ramp up over time.

Those DFL proposals are two of the many housing measures that legislators are rolling out as months of negotiations over spending priorities get underway at the State Capitol.

A coalition of housing advocates says it's a critical moment to spend $1 billion on building and repairing housing, and another $1 billion on rental assistance and tackling one of the nation's largest racial disparities in homeownership. Minnesota is projected to have a historic $7.7 billion budget surplus — an estimate that could grow in the upcoming economic forecast — and also has more than $1.1 billion in federal relief dollars left.

Republican Senate Housing Committee Chairman Rich Draheim expressed disinterest in another influx of emergency rental assistance, noting there are other programs that help people struggling with rent bills.

"If they are underfunded or overfunded, let's look at it," said Madison Lake's Draheim of existing programs. But with hundreds of millions having gone toward rent help, he said, "I don't think we need to spend more on it. People need to get back to normal. There are jobs out there everywhere."

Draheim's housing priorities this session are adding single-family homes and expanding homeownership. He said he is also concerned by a lack of transparency in the Minnesota Housing Finance Agency's use of federal rent assistance dollars and is calling for a legislative auditor review.

Minnesota received $673 million from the federal government for rent and utility assistance during the pandemic, the bulk of which was distributed by the state through its RentHelpMN program. When requests for aid jumped dramatically in January, housing officials decided to close the program to new applicants and gave people three days' notice to submit their requests.

Housing Commissioner Jennifer Ho told legislators last week she didn't think it would be financially responsible to be "oversubscribed," and didn't expect her requests for additional funding from the U.S. Treasury to be fruitful. As things stand now, she said, "We return to a somewhat tattered safety net" when emergency rental assistance runs out.

Gov. Tim Walz's recent supplemental budget proposal includes more funding for a trio of housing assistance programs that could help people who relied on the federal dollars. The additional spending for those programs totals $39.5 million in the current two-year budget cycle with more in the following years.

The single largest housing item in the Democratic governor's budget plan is $100 million to preserve and improve an estimated 2,850 homes that are affordable to low-income households. Additionally, his $2.7 billion infrastructure borrowing proposal includes $310 million to develop and rehabilitate housing.

Ho called Walz's housing measures "a good opening play" in an area she said requires a sustained "full-court press" from local, state and federal governments and the private sector.

"The level of need is enormous," Ho said. "It really is about trying to deal with the need to address supply, cost, and really understanding how do we meet the needs of lower-wage Minnesotans."

Lawmakers are offering an assortment of other housing-related bills. Some House Democrats are proposing $75 million to aid emergency shelters and are pushing a slate of tenant protections, including requiring a longer heads up before a lease is terminated.

Rep. Steve Elkins, DFL-Bloomington, is sponsoring the "Legalize Affordable Housing Act" that includes limits on cities' residential development regulations. Draheim, who has a poster of a house on the back of his Capitol office door reading "Legalize the American Dream," said that's an area where they can reach some compromise.

GOP members, meanwhile, are concerned about rent control measures like the one St. Paul voters approved, and Draheim said he wants to look at limiting state resources for cities with rent control. The possibility that Senate Republicans could oust Ho from the commissioner's spot also hangs over the various housing debates.

Despite policy differences, Howard said he hopes legislators can move quickly on emergency housing assistance.

"We have an urgent issue before us, which is to make sure that we are not going to see a wave of evictions amidst a pandemic," he said. "If you are a worker and you lose your job, or you lose income because of this pandemic through no fault of your own, we just cannot put folks in a position to have a lifetime of consequences due to something that isn't their fault."

Hodan Hassan — a health care worker, not the legislator who shares her name — also fears widespread evictions if rental assistance is curtailed.

She leaned on the state's rent help when she needed to stay home from work to care for her son with autism during the pandemic. She is back at work now, but drives elderly residents from her Bloomington apartment complex to the New American Development Center for assistance.

"I've seen the need first hand," Hassan said as she stood in the crowded Minneapolis center, where the line of people seeking aid spilled into the hallway. "We want to be able to see this continue to help communities not have long-term effects on their credit and their life."