Metro Area Sales and Use Tax for Housing
In 2023, the Minnesota Legislature approved a new Metro Area Sales and Use Tax for Housing for metro counties and cities. Tax revenues will fund the new Local Affordable Housing Aid (LAHA) program to:
- Provide emergency rental assistance
- Build or rehabilitate affordable housing
- Reduce homeownership disparities
- Support nonprofit affordable housing owners and developers
This new sales tax is estimated to generate $20 million a year for Hennepin County.
The Legislature also approved a Statewide Affordable Housing Aid (SAHA) program. This program is funded through appropriations. Both programs have the same criteria for metro-area jurisdictions. The combined programs are called LAHA/SAHA.
The funds from the new sales tax will begin to arrive in mid-2024. The county’s Housing and Development team has already begun to build up systems. They have strengthened operations to accommodate this growth by:
- Producing record numbers of affordable rental units
- Helping make homeownership more accessible
- Improving the health and safety of our homes
Hennepin County’s strategy
The county has proven investment strategies already tested through the pandemic. The county will implement a multiphase approach for the new sales tax revenue, including:
- A new ongoing eviction prevention fund by SAHA. This will continue the success of the COVID-era eviction prevention programs. It will also provide help at housing court where it is needed most.
- Building capacity of developers and owners to continue to create more affordable housing.
- Capitalizing reserves for supportive housing projects to ensure sustainability of high-impact programs. This will fund wrap-around social services that residents need to be successful for the long-term.
- Working toward production, once developer capacity is restored. Expand the work of the Affordable Housing Incentive Fund to create and preserve affordable housing. This will also continue the pandemic-era “Affordable Housing Accelerator” fund to provide higher amounts to rush projects meeting county priorities.
- Advancing disparity reduction and climate impacts in homeownership creation and preservation.
These strategies support Hennepin County’s vision of:
- Reducing disparities in housing cost burden
- Making homelessness rare, brief and nonrecurring.
These will be extra funds and won’t replace local funds for affordable housing.
In the fall of 2023, The Hennepin County Board affirmed the implementation framework for the new funding. In January 2024, new ongoing funding for Emergency Rental Assistance launched.
Later this year, the county will release its first request for proposals (RFP) for Repair+Grow. Funding this will bolster the capacity of affordable housing developers. The goal is to start dispersing that funding in 2025.
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