It was a big year for the community development field and MCCD is proud to see our efforts, and those of our members and partners, pay off in a big way! The election outcome last fall surprised a lot of people, coupled with the massive $17.5+ Billion budget surplus, and advocates around the state set out to increase funding requests. MCCD’s final state policy agenda focused in on 4 key goals that informed our advocacy for the 2023 legislative session:

• Close the Racial Homeownership Gap – Secure permanent funding for the Workforce Homeownership Program for the development & Preservation of Affordable homes. (HF 1635 | SF 3237)
• Build more Deeply Affordable Rental Housing – Lead advocacy efforts to secure Housing Infrastructure Bond (HIB) investments and secure transformative policy changes. (HF 302 | SF 1094)
• Support BIPOC and Immigrant Small Businesses – Advance permanent funding increase to support the Small Business Assistance Partnership Program. (HF 504 | SF 1720)
• Create Commercial Shared Ownership Opportunities – Establish the Community Wealth Building Grant Program to support shared ownership business models. (HF 318 | SF 1696)

The MCCD policy team grew last year and for the first time ever, we doubled our advocacy efforts at the Minnesota Capitol! Kelly Law took on the affordable housing work and Kari refocused efforts on the economic development programs & funding requests. See the highlights below:

Economic Development

Economic Development Final Funding Spreadsheet

Small Business Assistance Partnership Grants – $12.85 million (FY 24-25) & $5.45 million ongoing

• MCCD has been leading on this program and funding request for years and this year we are finally codifying this program and getting a significant funding increase.
• This program is a competitive grant program at DEED that supports small business technical assistance. This grant has helped supplement technical assistance for small businesses around Minnesota for years. With codifying the program, we added LGBTQ + as a targeted group along with clarifying that cooperatives and commercial land trusts are eligible businesses that can be helped with this program.
• $12.85 million is an increase from the previous base funding of $2.85 million and there will be at a minimum $5.45 million in future years.
• DEED is currently working on the RFP for this grant program – we expect it to come out within a month or so. Sign up here to get notified of this grant opportunity as well as others! MCCD will also track the application and notify partners when available.

Community Wealth Building Pilot Program – $3 Million

• This bill came together last year for the first time in an effort to get the state to do more to support commercial shared ownership businesses.
• MCCD has been named as the organization to pilot the program for DEED to support commercial land trusts, worker cooperatives and other employee-owned businesses!

Expanding Opportunity Low-Interest Capital Fund – $10 Million

• This is a new revolving low-interest loan fund that will provide affordable capital to DEED partner CDFIs and other non-profit economic development organizations. This is very exciting as we’ve never had anything like this at the state level!

Affordable Housing

Housing Final Funding Spreadsheet

Over a decade ago, MCCD helped create the Homes for All Coalition with some of our key partners. From the first $100 million in HIBs in 2014 to the Lt. Governor Affordable Housing Forum in 2018, little by little our advocacy efforts along with our partners and members has finally paid off! We hope that $1 Billion is the new standard so we can truly make the transformative changes that will not just change the stability of families across Minnesota, but also the communities they call home. In total, the bill includes $1 billion in investments for the entire housing continuum.

Housing Infrastructure Cash (In place of HIBs) – $200 million

• MCCD led efforts to secure a historic allocation in Housing Infrastructure cash. This investment will allow our affordable housing members to build thousands of new units of permanently affordable housing.
• We also worked to ensure that our policy changes were included in the final bill, including expanding the eligible uses of HIBs to include the development and preservation of housing at 50% AMI and under without supportive services. This change will ensure that folks between 30% and 50% AMI not needing supportive services will also have access to housing that is affordable to them.

Workforce Homeownership Program – $75.5 million

• With $20.5 million authorized in the Housing budget and $55 million authorized by Taxes, the Workforce and Affordable Homeownership Program will receive a total of $75.5 million over the next biennium.

Homeownership Education, Counseling, and Training – $3.7 million

• These resources will help get potential homeowners ready to access the new down payment assistance funding, along with increased affordable homeownership supply.

Emergency Rental Assistance – $115.5 million

• The Family Homeless Prevention and Assistance Program will receive $65,538,000 for the biennium (2024-25), in addition to the $50 million already awarded, for a total of $115.5 million for this biennium.
• These crucial dollars will ensure that Minnesota families remain stable in their housing TODAY, and will decrease the number of evictions that Minnesota families face.

Down Payment Assistance – $150 million

• $100 million of the available down payment assistance dollars will be available through Midwest Minnesota Community Development Corporation as an administrator for the community-based first-generation homebuyers down payment assistance program.

There were many other provisions in both the economic development and affordable housing bills that we are excited about and have been supporting, including the supplemental funding support for supportive services, affordable housing providers relief, 4d, public housing bonding investments, small business grants and economic corridor redevelopment. We are so excited to see what all of these investments can do to help Minnesotans across the state and are super thankful to all of the support we have from our members and community partners.

On Wednesday, September 7th, MCCD hosted a community economic development member meeting with a specific focus on labor market conditions in the Twin Cities. MCCD was lucky enough to be joined by two guest speakers from the Community Development and Engagement team at the Federal Reserve Bank of Minneapolis: Mary Hogan, Senior Policy Analyst and Tyler Boesch, Economist and Analyst.

The Minneapolis Fed serves the public by supporting a growing economy and operates in an area known as the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, and 26 counties in northwestern Wisconsin, and the Upper Peninsula of Michigan. The Community Development and Engagement team works to advance the economic well-being of low- to moderate-income people and communities living and working in the Ninth Federal Reserve District.

During the presentation, MCCD members gained insights on the status of the labor market across the Twin Cities Metro and Minnesota. We learned employers are reporting that labor availability for open positions is the most challenging obstacle that they are facing when operating their business, indicating the tight labor market present in Minnesota and nationally.

Despite low unemployment rates and a competitive labor market, disparities in employment persist. In Minnesota, the overall unemployment rate, which is defined as the percentage of those in the labor force looking for work, has dropped to pre-pandemic levels, however, this same trend has not been felt equally by all Minnesotans. While the unemployment rate for White Minnesotans is sitting right around 2.3%, the unemployment rate for Black Minnesotans and Hispanic Minnesotans is 6% and 4%, respectively. Tyler and Mary shared explanations for why these disparities continue to exist:

• Occupational Segregation: Workers of diverse groups are not proportionally found in each occupation; rather, some occupations have larger shares of BIPOC workers than others. Certain occupations that are more vulnerable to economic shocks, like the COVID-19 pandemic, which are also more heavily concentrated with BIPOC workers are more likely to have higher levels of racial disparities in unemployment.
• Systemic Factors: Other factors, including education, housing, and criminal justice also contribute to disparities in employment. Minnesota has some of the largest gaps in educational outcomes in the country by race and ethnicity. Additionally, racist housing policies like redlining and systemic housing discrimination have heavily influenced regional patterns for BIPOC communities, including labor market patterns.

Racial discrimination also plays a notable role in creating labor market disparities. As seen in the graph above, White applicants typically had a higher callback rate than Black applicants when applying for a job in the Twin Cities. This disparity is evidenced more acutely when also accounting for factors such as having a criminal record.

The consequences of labor market disparities are significant. The Minneapolis Fed estimates that if racial gaps in the labor market were closed, the GDP, or total economic output, in Minnesota would have increased by $6.6 billion from 2005 to 2019. As Tyler and Mary both stated, when individuals are fully able to participate in the labor market, the economy benefits.

To conclude the presentation, Mary shared potential avenues for rectifying labor market disparities that the Minneapolis Fed is specifically focused on:

• Ban non-compete agreements, which limit workers’ employment opportunities.
• Remove occupational licensing requirements that are not needed to ensure public safety as BIPOC workers are less likely to be licensed than White workers. This matters as licensed workers tend to receive higher wages and more secure employment than unlicensed workers.
• Establish or expand short-time compensation (STC) programs to prevent layoffs, as well as expand unemployment insurance eligibility.

Below are some links to additional materials and resources shared by Mary during the meeting:

• “Occupational Licensing Can Limit Employment Options for Immigrants”
• “How Occupational Licensing Limits Access to Jobs Among Workers of Color”
• “Noncompete Contracts Sideline Low-Wage Workers”
• “What Did and Didn’t Work in Unemployment Insurance During the Pandemic”

MCCD is grateful to Tyler, Mary, and our members for sharing their time with us, and we look forward to continued efforts to ensure equitable access to the labor market for all Minnesotans.