Minnesota Housing warns of federal funding uncertainty, reports $269M dispersed from 2023–24 resources

Jennifer Ho, commissioner of the Minnesota Housing Finance Agency, updated the Senate Committee on Housing and Homelessness Prevention on federal funding flows, program administration and the agency’s recent activity.

Ho said appropriated resources comprised about 15% of agency activity in 2024 and described major federal funding streams that affect state housing activity, including HOME, the National Housing Trust Fund, HOPWA and HUD project‑based rental assistance. “By far, the largest line item that we touch is that we’re the administrator for 34,000 units of privately owned, HUD assisted, project based rental assistance,” Ho said, adding the program moves about $250 million a year and that median household income for residents in those households is roughly $15,000.

The commissioner reported the agency had dispersed nearly $269,000,000 from 2023 and 2024 resources as of the week of Feb. 3 and had committed an additional roughly $620–630,000,000. She explained the typical timing: appropriations are often committed quickly through awards and RFPs, while disbursements follow the construction and draw schedule of each project. Ho said some funds remain unspent because projects are not yet shovel‑ready and require coordination of multiple financing sources.

Ho flagged recent operational issues tied to federal systems and HUD interactions. The agency experienced a temporary inability to access a federal payment system and later encountered an unusually low account balance when attempting to draw routine administrative funds; HUD described the incident as a glitch and said it would be corrected within two weeks, she said. Ho told the committee the agency has about 30 staff dedicated to administering the HUD project‑based contract and warned that inability to draw HUD funds for administrative expenses would threaten their ability to continue as the administrator for that contract.

Committee members asked about larger federal risks. Ho said she had learned that a HUD contact who administered the agency’s Section 811 contract was no longer employed at HUD and said rulemaking and contract execution require trained federal staff. “If we lose the workforce... I think that it will have the same effect of having cut the funding,” she said, referring to expected federal staffing reductions.

The commissioner also summarized other agency matters: the Metro‑wide sales tax for housing transfers funds to the agency (MHFA received an estimated $26.6 million for FY24 and an estimated $41.9 million for FY25), the agency has launched RFPs and intent‑to‑apply processes for programs funded in 2023, and the ratio of operating expense to assistance provided was reported at 2.45% in 2024. Ho said some programs launched by the legislature have high demand: an intent‑to‑apply for a Local Housing Trust Fund grant drew 66 responses requesting more than $12 million for $5.8 million available; the Bring It Home rental assistance application was launched and staff estimated it could serve 5,000 households with current funding.

Chair Port and members asked follow‑up questions about community development block grant disaster recovery, Section 811 contracts, the Green and Resilient Retrofit Program awards, liquidity on the agency’s bank side relative to lending and manufactured housing acquisitions, and the time lag between commitments and disbursements. Commissioner Ho and agency staff said they would follow up with additional details in writing for several of the committee’s questions.