Committee backs measure letting some cities and HRAs invest long-term reserves in housing funds
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Summary
Senators recommended SF4367 to pass after testimony from union and housing-trust representatives that the bill would allow qualifying cities and housing-redevelopment authorities to invest up to 15% of long-term reserves in federally backed, housing-focused fixed-income funds, with safeguards including SEC registration and 80% federally guaranteed holdings.
The State and Local Government Committee recommended Senate File 43-67 to pass and placed it on general orders after testimony supporting a limited expansion of local investment authority for housing finance.
Sponsor Senator Jeong said the bill would allow qualifying local governments — cities, counties and housing and redevelopment authorities (HRAs) that meet statutory criteria — to invest a portion of long-term reserves in vehicles such as a housing investment trust to support local housing projects without using general-fund dollars.
Richard Kajewski, political director for the Northern Midwest Regional Council of Carpenters, and Pat Harris of the AFL-CIO Housing Investment Trust told the committee that modest investments have produced returns while directing capital to Minnesota housing projects. Harris described the proposed authorization as limited to a subset of entities (similar to prior 1.18a changes) with a 15% cap and fund requirements including SEC registration and that 80% of purchases be federally guaranteed or insured at time of purchase.
Harris said the funds in question would principally be fixed-income vehicles, largely federally guaranteed securities, and would not require cities to invest. "It does not require investment by a community and does not seek or require state revenue," he said.
Committee members asked about liquidity, risk and whether funds would use pension dollars; witnesses clarified that the measure concerns city reserve funds not pension funds and that liquidity depends on the particular fund (the AFL-CIO-sponsored fund described a monthly withdrawal feature). After discussion, Senator Zhang moved to recommend the bill to pass; the committee recorded a voice vote and the motion prevailed. SF4367 was recommended to pass and placed on general orders.
The committee laid multiple other local-government provisions in the same session into the omnibus DE and will consider technical drafting in follow-up markup sessions.