HRA director delivers final budget presentation, urges more staff and stable funding to speed housing production

Director Nicole Newton, executive director of the Housing and Redevelopment Authority and director of Planning and Economic Development, delivered what she said was her sixth and final budget presentation as she previewed the HRA’s 2026 spending priorities and warned that some HRA funding sources are “diminishing.”

Newton told the HRA on Tuesday that her department’s top priorities for 2026 are housing production and preservation, implementation of the downtown investment strategy (including office-to-housing conversions), continued emergency rental and down-payment assistance, and investments in commercial corridors, district councils and public art. “The more housing production we have, the more affordable the housing is overall,” Newton said.

The presentation summarized recent accomplishments — elimination of parking minimums, new development on HRA land, a $5 million sewer investment in Farwell Yards enabled by a TIF spending plan, and leveraged Ramsey County ARPA funds that helped produce housing for households at 30% of area median income. Newton also described internal department changes since 2020: added supervisor roles, a second deputy director functioning as a chief financial officer, and increased staff diversity.

Why it matters: Newton and multiple commissioners said the HRA now faces a choice between adding operating revenue or cutting programs. Newton warned that both the HRA general fund and the HRA loan enterprise fund have produced one-time receipts in past years (land sales, large loan payoffs) and that those sources are shrinking. “There’s a funding source there that’s getting smaller and smaller,” Newton said, adding that continues spending at current levels will make those funds smaller each year.

Key budget proposals and program notes

- Housing investments: The plan includes continued funding for Emergency Rent Assistance (ERA2), down-payment assistance and an inheritance fund aimed at descendants impacted by past highway construction. Newton identified a combined $5 million proposed for office-to-housing conversions and downtown development drawn from the Housing Trust Fund and Local Affordable Housing Aid (LAHA) sources. She said some conversion projects are already in the pipeline and that the City’s new Downtown Development Corporation will be an important partner.

- Small-scale development and ADUs: The HRA would set aside $1 million for small-scale developments and fund preapproved accessory dwelling unit (ADU) plans to reduce permitting friction. Newton estimated a typical subsidy gap per ADU might be on the order of “$50,000,” but said exact amounts were “not specified” and would depend on projects.

- Commercial corridors, district councils and public art: The commercial-corridor program is shown at $1 million in the current draft (down from $1.4 million last year). Newton said the district council coordination program and the city’s 1% for Public Art program need staffing and continued investment; she argued both are under-resourced for the current workload.

- Full Stack and business retention: The Full Stack tech/innovation program is budgeted at $300,000 (with an expected $50,000 carryover) and could grow if the HRA helps underwrite a larger signature event; business retention and expansion is shown at $500,000, a flexible source to help retain or attract employers and services such as groceries downtown.

Staffing and transfers

Newton said several needed positions (principal project managers, a development coordinator and additions to commercial-corridor and district-council teams) were proposed but largely funded by repurposing existing department dollars and attrition rather than new levy or citywide funds. When commissioners asked whether any new positions required new ongoing dollars, Newton said the positions in the draft are funded by reallocated or repurposed sources and that she would have preferred additional full-time positions funded by the levy or reduced transfers out.

Chair Johnson and other commissioners pressed on “transfers out” — recurring transfers from HRA accounts to pay for programs or positions in other parts of city government. Johnson said she intends to pursue a separate, in-depth follow-up on transfers during the budget cycle. “I intend to talk about this a lot more this year in the budget cycle,” Chair Johnson said, noting those transfers make it harder for the HRA to sustain its own operations.

Revenue notes and constraints

Newton noted no levy increase in the draft; the HRA is budgeting to its maximum levy under the current calculation method. She repeated that certain HRA funds (loan enterprise, HRA general fund) have declined as one-time receipts have been spent and urged the board and administration to consider either additional levy authority or fewer transfers out of HRA-controlled funds.

Context and next steps

Commissioners asked for more detailed budget-to-actuals information, including results from programs funded in prior years before making decisions on new allocations. Newton and staff said follow-up materials and a subsequent presentation will be provided in the weeks ahead. Multiple commissioners asked staff to return with clearer tracking on how transfers from HRA funds have been used across other city departments.

Ending

Newton closed by saying she loved the work and the city and that department staff would continue follow-up in her absence. Staff and commissioners indicated additional briefings and a deeper review of transfers and staffing will be scheduled during the formal budget process.