By: Kari Johnson & Kelly Law

The Minnesota state legislature wrapped up its work by 11:59 pm on Sunday, May 19, 2024. It will be remembered as one of the most chaotic endings to a legislative session in Minnesota history. You can read about the details on MPR.

Generally, during the even-numbered years of the two-year biennium, the legislature focuses on passing policy provisions, supplemental budget items, and capital investment for public infrastructure projects. MCCD’s legislative agenda was heavily focused on economic development policy, but we were also seeking substantial ongoing investments in affordable housing. Read more about what passed and what didn’t.

Economic Development 

Economic Development Final Bill Language  

The Economic Development and Jobs Committees received a small $1 million budget target, but there have been some changes and cancellations of funding allocated in 2023 that are resulting in roughly $5 million in additional funding expenditures going to fund some direct appropriations for mostly workforce organizations. MCCD’s policy items focused on our DEED Programs Review working group are in both the House and Senate Omnibus Bills.  

Policy Changes that passed and will impact the Emerging Entrepreneur Loan Program, Expanding Opportunity Growth Fund, Community Wealth Building Pilot Program, and the Small Business Assistance Partnership Program. We will be working with DEED over the summer and fall to ensure that these changes take effect as soon as possible. We expect to ask for funding increases for these programs during the 2025 legislative session.  

• Fee-based lending addition for the Emerging Entrepreneur Loan Program (ELP), Expanding Opportunity Growth Fund, and the Community Wealth Building Pilot.
• 10% interest rate cap for the Emerging Entrepreneur Loan Program (ELP), Expanding Opportunity Growth Fund, and the Community Wealth Building Pilot.
• Eligibility clarification that tribal economic development entities and Community Development Financial Institutions (CDFIs) are eligible to access these programs.
• Streamline the underwriting process for the Emerging Entrepreneur Loan Program by removing duplicative underwriting for certain partner organizations.
• Free technical assistance policy change will adjust the Small Business Partnership Program so that the grant can only be used to provide free technical assistance.
• Incorporate automatic loan forgiveness for borrowers in good standing for the Emerging Entrepreneur Loan Program (10%) and the Community Wealth Building Pilot (15%). 
• 15% admin allowance for grantees of the Small Business Assistance Partnership Technical Assistance Program. 
• 1% loan closing fee from DEED to help support administrative costs associated with loan closing and servicing for the Emerging Entrepreneur Loan Program and the Expanding Opportunity Growth Fund. 

Affordable Housing

Housing Final Funding Spreadsheet  

Following last session’s remarkable $1.5 billion investment in housing, housing had a much smaller budget target of only $10 million this session. Below, you will find some of the housing provisions that MCCD worked on or supported.  

Housing Infrastructure Bonds –  $50 million  

• MCCD led efforts to secure new resources in Housing Infrastructure Bonds. This new investment will help ensure that new development of critically needed affordable housing can continue, while also working to ensure that we preserve our existing affordable housing.  
• Expanded eligible uses in HIBs to include, for the first time, the development of cooperatively owned affordable housing.  
• MCCD advocated for $500 million in HIBs this session, and we are disappointed that the allocation did not match the very clear need. We will continue to fight for additional investments in HIBs and other housing programs going forward until every Minnesotan has access to a safe and affordable home.  

Housing Affordability Preservation Investment Program – $50 million  

• This vital new program will support the recapitalization of distressed affordable housing properties, preserving state-funded affordable housing assets and ensuring that families currently stably housed can remain in their homes. 

Emergency Rental Assistance – $8.1 million  

• The Family Homeless Prevention and Assistance Program will receive $8.1 million for the biennium.  
• These crucial dollars will ensure that Minnesota families remain stable in their housing and will decrease the number of evictions that Minnesota families face.    

Task Force on Long-Term Sustainability of Affordable Housing   

• This task force will bring together experts from across the sector to study the financial health and stability of affordable housing providers and to provide recommendations to the Minnesota legislature to promote long-term sustainability to prevent the loss of affordable units and promote housing security for renters.   
• MCCD was named as an appointee for the task force and will appoint two members with experience operating affordable rental housing.  

Metro Sales and Use Tax for Housing  

• MCCD supported efforts to clarify in statute that funds from the new Metro Sales and Use Tax will be used as an additional resource, rather than to replace current sources of funding.  
• We also supported clarifying that funds from the tax can be used to finance the operations and management of financially distressed properties, supportive services or staff of supportive services providers, and the costs of operating emergency shelter facilities. 

Minnesota Cooperative Housing Act (308C)  

• This bill creates a new 308C cooperative housing statute that consolidates housing cooperative incorporation and governance under one statute. The purpose of this new chapter is to provide new housing co-ops with a standardized framework for development and to support the enabling environment for co-ops.   

What Did Not Pass This Session  

Source of Income Protections 

• Despite broad majority support and 20+ other states passing protections for renters from the source of income (SOI) discrimination, Senator Ron Latz made it clear that he would not vote for a bill that contained SOI protections. Therefore, SOI protections did not make it into the final bill. MCCD will continue to advocate that all Minnesotans have access to housing that is safe and affordable, regardless of their source of income.   

 Housing Cooperative Package 

• MCCD also looks forward to continuing advocacy efforts to support the development of affordable housing cooperatives. This session, we introduced two new programs: the Affordable Housing Cooperative Technical Assistance Fund, and the Affordable Homeownership Cooperative Down Payment Assistance Fund. Given the extremely limited budget for housing this session, we were unable to move the programs forward, however, we received extremely positive feedback, and we know that, once enacted, these programs will support the enabling environment for housing cooperatives and serve as a tool for generational wealth-creation. 

Land Use Regulation Changes  

• At the beginning of the 2024 legislative session, there seemed to be a lot of hope for passing a bipartisan, cross-sector supported land use and zoning changes reform package. Unfortunately, the bill did not make it across the finish line due to decreasing lawmaker support from the suburban metro districts. You can read more about here.   

Cannabis Business Development Changes  

• MCCD saw an opportunity to help bring forth some changes to the cannabis business development programs this legislative session. We were focused on getting more admin support for organizations interested in cannabis lending, higher loan allowances for social equity applicants, and flexibility in the application process for new subsidiary entities of existing DEED partners. While these changes did not pass this year, DEED is preparing to launch the programs and is currently seeking input from organizations.  
• The Minnesota Department of Employment and Economic Development (DEED) and Office of Cannabis Management (OCM) are seeking public input on the development of four new state programs for the legal cannabis industry: CanGrow, CanNavigate, CanStartup, and CanTrain. These four new programs were created to support a social equity-focused cannabis industry that supports small, independent businesses in Minnesota. DEED and OCM want to center community expertise in the design of these programs so they will meet the state’s needs.  
• To accomplish this, DEED and OCM have launched a Request for Information (RFI) to invite input from the community. Please provide your feedback in this Request for Information (RFI) survey form to help guide the state as they develop the priorities for the grant and loan programs by June 14.  

We are thrilled about the many provisions in both the economic development and affordable housing bills that we have been championing. The potential impact of these investments on Minnesotans statewide is incredibly exciting.  

We are deeply grateful for the unwavering support from our members and community partners and can’t wait to collaborate throughout the year to shape policy and funding initiatives for the next legislative session. Stay tuned, and we encourage you to join our member meetings and events to actively influence our priorities!  

Hope to see you on June 13 as we celebrate the 2024 legislative session! 

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.