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Council holds first reading on housing trust fund to accept state affordable-housing aid
Summary
Hermantown council introduced an ordinance to create a housing trust fund to hold state-provided affordable housing aid; staff said state funding may carry affordability conditions and the council will vote at a future meeting.
The Hermantown City Council held a first reading of an ordinance to create a local housing trust fund that would accept and hold state-provided affordable-housing aid and other contributions to support local housing projects.
Chad Ranjadeghi, the city’s Economic Development Director, explained the fund’s purpose and statutory basis. “This is intended to create flexibility when wanting to support housing projects at the local level, to help address any gaps in housing projects,” Ranjadeghi said. He told the council the trust fund mechanism was enabled in Minnesota statute in 2017 and can be used for a range of local housing-support activities, including gap financing and mortgage buy-downs.
Ranjadeghi cautioned that money deposited from the state may have affordability requirements attached. He said the initial deposit referenced in the ordinance is state affordable housing aid provided to the city under legislation passed in 2023; those state dollars may carry conditions when deployed from the fund. He and staff also confirmed that the initial funds to capitalize the trust fund are external (state) dollars and not city general-fund dollars, though local matching funds could be required if the council approves related grant applications.
Because the ordinance was on its first reading, the council took no final vote and will schedule further review and a public hearing before final adoption.
