On March 11, 2021, the American Rescue Plan Act of 2021 (ARP) was signed into law, including the appropriation of more than $130 billion to the Coronavirus Local Fiscal Recovery Fund, for making payments to metropolitan cities, counties, and other units of local government to mitigate the fiscal effects stemming from the public health emergency. Hennepin County expects to receive direct payments from the U.S. Treasury totaling more than $220 million, and received the first-half payment of $122.9 million in May of 2021.

The American Rescue Plan Act provides that money from the Coronavirus Local Fiscal Recovery Fund may only be used to cover certain costs incurred by December 31, 2024, including costs to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts. Under the available guidance from the U.S. Treasury, this category of eligible costs can include COVID-19 mitigation and prevention; support for isolation or quarantine; support for prevention, mitigation, or other services in congregate living facilities; capital investments in public facilities to meet pandemic operational needs; supports for vulnerable populations to access medical or public health services; or services or outreach to promote access to physical or behavioral health primary care and preventative medicine. Additional services may be an eligible use of Federal Pandemic Funds when provided to populations, households, or geographic areas that are disproportionately impacted by the pandemic, including funding community health workers and public benefits navigators; housing services to support healthy living environments; services to address homelessness such as supportive housing; affordable housing development; or housing vouchers, residential counseling, or housing navigation assistance. The U.S. Treasury guidance also provides that local governments are authorized to transfer these funds to other constituent units of government, recognizing “the importance of providing flexibility to governments seeking to achieve the greatest impact with their funds, including by working with other levels or units of government[.]”

The existing Simpson emergency shelter is operated at the Simpson United Methodist Church building at 2740 First Avenue South in Minneapolis. However, the building’s deteriorating condition means that Simpson’s ability to continue operating the shelter safely there will soon be seriously affected. Simpson’s plan to re-develop the site of the church building will address that with a new 5-story building comprised of a new shelter designed to support person-centered services for at least 70 individuals, 42 units of permanent supportive housing for persons who have experienced homelessness, and community and service space to provide intensive services to both shelter and permanent housing residents.

The demand for shelter has fluctuated throughout the pandemic but the Simpson shelter has been at or near full capacity throughout. The new shelter will provide an invaluable resource for those experiencing homelessness, including any people displaced through the economic impacts of the pandemic. It will have two components: a permanent supporting housing component and an emergency shelter component. In alignment with the CDC guidance on community health during the pandemic, the new facility will improve upon spacing and separation of sleeping spaces by doing away with bunk beds, adding space between sleeping areas and reducing the number of guests sleeping in each room. These measures, along with the on-site health clinic, will make for much safer shelter operations during the pandemic. Finally, Simpson will be able to build on what has been accomplished so far in providing emergency shelter for adults experiencing homelessness and implement a safe, healthy, person-focused, and housing-focused program.

The Hennepin County Housing and Redevelopment Authority has already supported this development with an award of $840,000 in Supportive Housing funds for the permanent supportive housing component of the proposed development. Similarly, the City of Minneapolis, has committed $1,260,000 from the Affordable Housing Trust Fund (AHTF) to support the permanent supportive housing component. However, the lack of financing options for the shelter component of this development has been a barrier in obtaining other financing to support the permanent supportive housing component.

This request would utilize the County’s federal ARP funding to contribute funding for construction of the new shelter component of this project. Staff from the City of Minneapolis are proposing a matching allocation from their federal ARP funding. Transferring the County funds to the City will allow the City to manage this project. Simpson has also secured $3.5 million in private gifts and pledges from the community to support the project. All these allocations of funding together would close the funding gap for the shelter and will greatly assist in the whole project moving forward.   This will ensure that Simpson can continue providing emergency shelter as part of our homeless response system, which has been a critical resource during the pandemic and as a result of the economic impacts of the pandemic. The community cannot afford to lose this resource.

This action: This board action will authorize up to $3,500,000 from the County’s federal American Rescue Plan Act funding, for transfer to the City of Minneapolis for eligible costs relating to the development of a new emergency shelter facility for adults experiencing homelessness, as part of the larger permanent supportive housing, shelter, and service center project at the site of the Simpson United Methodist Church building.

Disparity reduction: This board action request aligns with Hennepin County disparity reduction efforts by funding an emergency shelter facility for adults experiencing homelessness, most of whom are disparately impacted by homelessness and housing instability.