Tax credit for workforce housing.

Byline: Brian Johnson

When it comes to attracting workforce housing, the city of Savage has made some headway in recent years. But city officials say there's still a big need for homes that fit the budgets of working people with modest incomes.

That's what brought Savage Mayor Janet Williams to a recent legislative hearing at the Capitol, where she testified in favor of a House bill that would create a Minnesota Housing Tax Credit to help stimulate workforce housing development.

Businesses like Amazon and Shutterfly have brought hundreds of jobs to the southwest Minneapolis suburb of Shakopee in recent years. That creates more demand for workforce housing not just in Shakopee, but in neighboring cities like Savage, Williams said.

"The state provides help for businesses that come to our cities," Williams said at the hearing. "How about some help for affordable housing for the workers?"

House File 1156 is modeled after a North Dakota tax credit program. The North Dakota program leverages $5 in private development money for every $1 invested, and has helped create more than 2,500 workforce housing units since 2011, said Elizabeth Glidden, executive director of the Minnesota Housing Partnership.

Taxpayers with state income, corporate, or insurance premium tax liabilities would fund the program. Taxpayers would receive credit against their state tax liability equal to their contribution to a specific development or to a general loan pool, the organization said.

Under the bill, a taxpayer could contribute "no less than $100 and no more than $5 million" to the Minnesota housing tax credit fund. The total amount of tax credits allowed is limited to$25 million annually.

Glidden estimates the Minnesota program would help create 350 new housing units for every $25 million invested. Alternatively, the same amount of investment could "deepen affordability" in 1,000 units, she said.

The House Taxes Committee heard the bill last Wednesday and laid it over for possible inclusion in an omnibus bill.

More than 70 organizations, including the Minneapolis Regional Chamber of Commerce, the St. Paul Regional Chamber of Commerce, and the League of Minnesota Cities, have signed on in support of the Minnesota bill, Glidden said.

To illustrate the need, Glidden cited an August 2018 report from then-Gov. Mark Dayton's Housing Task Force, which found that Minnesota needs 300,000 more single-family and multifamily housing units by 2030 to meet the needs of the state.

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