(St. Paul) – The Minnesota Senate on Tuesday passed the Democrats’ $1.1 billion Housing bill, which funnels money to a variety of feel-good housing programs but fails to address the root causes of the state’s current housing crisis. The bill, which spends more than eight times the previous housing budget, does little to tackle the shortage of 95,000 available housing units and does nothing to reduce the onerous regulations that are driving up prices.
“This bill is a gigantic missed opportunity,” said Senator Eric Lucero, the lead Republican on the Housing Committee. “Instead of addressing the real problems that cause housing to be so expensive here, Democrats have nothing better to offer than band-aid solutions that will exacerbate our problems in the long run. It’s a bad bill.”
The median price of a new construction home in Minnesota is far higher than any neighboring states, despite similar weather and cost of building materials. Minnesota is $95,000 more expensive than Illinois and North Dakota; $120,000 more expensive than Wisconsin; $153,000 more expensive than Iowa; and $173,000 more expensive than South Dakota. (Zondra, March 2023.)
The most controversial item in the bill is a $131 million appropriation for a new rental assistance program – a modified version of the troubled and controversial RentHelpMN program. RentHelpMN was recently the subject of a damning audit, which found the Minnesota Housing Finance Agency badly administered the program.
“A program to simply pay people’s rent is badly misguided, especially since it is funded with one-time money,” Lucero said. “When the Democrats’ rental assistance program ends, our only accomplishment will be that we have made people complacent, encouraged landlords to raise rent prices even further, and created a cycle of government dependency. This one is worse than a band-aid because it’s actually causing damage.”
During the floor debate on the bill, Senate Republicans offered an amendment to impose several guardrails and protections recommended by the Legislative Auditor on the new rental assistance program, to ensure it does not suffer from the same waste and mismanagement as RentHelpMN. Democrats rejected that amendment.
Senate Republicans offered a number of additional amendments to the bill to improve accountability and transparency, and to address the underlying issues of housing affordability, including amendments that would:
- Impose a 48-month assistance limit for the new rental assistance program
- Freeze building code until 2026, which is a significant contributor to Minnesota’s expensive housing market
- Provide additional funding for the Workforce Homeownership Program to build more housing units
- Improve oversight, accountability, and transparency for housing grant recipients
- Reduce mandates that drive up costs
- Provide funding to build more nursing homes to address the ongoing nursing home shortage crisis
- Prohibit anyone indicted for fraud related to the RentHelpMN or Feeding our Future scandals from being eligible for grants under this bill