Minnesota legislators have agreed to more than $1 billion in new state-backed buildings and construction projects, placing new buildings, housing and economic development initiatives in every corner of the state.
The agreement breaks a major deadlock in the closing days of the session as Democrats and Republicans had not been able to agree on the right mix of state-backed projects.
The agreement includes $100 million for roads and bridges and another $100 million for affordable housing, the largest housing investment in state history.
The measure calls for $846 million in state-backed bond debt and another $200 million in cash.
– Star Tribune
Shaun McElhatton of law firm Leonard Street (@leonardnews) talks MN Historic Tax Credits. McElhatton, who is one of Leonard Street’s shareholders and heads their commercial real estate and residential subgroups, did a broad Q&A with Finance & Commerce. As part of it, he discusses the importance of the historic tax credit to development in the area. His comments seem very extensible to Minnesota’s proposed Housing Tax Credit as well. From the Q&A:
[Finance & Commerce] What ongoing impact do you see the Historic Tax Credit – which allows a state income tax credit equal to 20 percent of the cost of rehabilitating a qualifying historic property – having for developers?
[McElhatton] It’s really hot – it’s already driving significant development. I’m working on several projects right now that probably wouldn’t be going forward without the Historic Tax Credit. I think there’s some concern right now about the possibility that the Legislature might cut back on it. I haven’t heard anything concrete either way. But if it did do that, of course, the development that’s being driven by that tax credit would most likely go away. Nevertheless, there are a lot of people looking for tax credits because they make deals possible that probably wouldn’t be possible without it.
Minnesota is considering a state LIHTC program. The Minnesota Housing Tax Credit bill is pending with the state legislature. If passed, the bill would create the capacity for state tax credits that would be amplified by federal and private programs. The bill is modeled on the 13 state LIHTC programs already enacted and has won support from community developers in Minnesota. From Finance & Commerce:
Best of all, for every $1 million the state invests in this new tax credit pool annually over the next five years, developers will be able to leverage $21.5 million in additional public and private investments, creating 144 jobs directly and 60 jobs indirectly while rehabilitating or creating 140 units of housing.
In Massachusetts, the state LIHTC has been in place since 1999. Originally set at $5 million, the pool has inspired enough confidence for lawmakers to increase its size to $10 million. It is credited with helping to finance more than 3,500 homes.
The state tax credit program in North Carolina has helped finance more than 260 properties with a total of 20,248 apartments. Georgia’s LIHTC pool has resulted in 165 new properties with a total of 12,630 homes since it was first established in 2000. Based on projections from a University of Georgia study, between 2004 and 2009 alone the Georgia tax credit program generated $5.7 billion in incremental economic activity.
Congrats on 40 years, CommonBond – and on your nimbleness with housing finance. One of the Midwest’s largest non-profit developers has managed to thrive despite the roller coaster markets during its history. One key to its success has been the organization’s ability to adapt. In the world of housing finance, that has meant foresight in terms of funding sources and deal structures. From the Pioneer Press:
In 40 years, 40,000 people have called CommonBond homes home. CommonBond oversees 5,000 rental apartments and townhomes for families, seniors and people with disabilities in 50 cities in Minnesota, Wisconsin and Iowa. Housing finance has had a "fascinating trajectory," said Joe Errigo, who led the organization from its first days until his retirement in 2006. Federal funding was typically the sole source when CommonBond began its work. Now, those dollars have dwindled, and it’s not uncommon for a project to have 10 to 12 sources of funding from other public entities, as well as private ones.
Morphing from an entity that put roofs over people’s heads to one that can figure out the availability of and compliance issues related to multiple funding outlets is no simple task. To see that group thriving today is a testament to the group’s leadership and ability to develop management talent.