On August 17, 2021, the County Board allocated $46,000,000 in Federal Pandemic Funds for equitable housing recovery strategies (Resolution 21-0305) such as:

• Investments to immediately increase affordable multifamily housing production, such as:
  •  Gap funding for affordable housing projects serving populations disproportionately impacted by the COVID-19 public health emergency
  •  Investments to address a backlog of deferred rehab need in Naturally Occurring Affordable Housing (NOAH) properties (a primary source of housing for populations disproportionately impacted by the COVID-19 public health emergency) and support for additional non-profit preservation acquisition of at-risk NOAH properties

• Acquisition of properties supporting affordable housing along the housing continuum, especially single adults experiencing homelessness/housing instability
•  Homebuyer Assistance programs targeting populations disproportionately impacted by the COVID-19 public health emergency.

Resolution 22-0136R1 (adopted March 22, 2022) authorized the County Administrator to rescind the funding source for any prior board action that authorized use of Federal Pandemic Funds for pandemic recovery activities in order to use other resources (“pandemic recovery funds”) for the same activities. The County Administrator has accordingly rescinded the original funding source for Resolution 21-0305 and designed pandemic recovery funds for the previously authorized equitable housing recovery strategies. 

Consistent with Resolutions 21-0305 and 22-0136R1, staff recommends transferring $3,316,000 of the $46,000,000 authorized pandemic recovery funds to the Hennepin County Housing and Redevelopment Authority (HCHRA) to increase the supply of long-term affordable housing for low-income households, especially single adults experiencing homelessness/housing instability.

Specifically, to address the general lack of affordable housing, the HCHRA will use the $3,316,000 disbursement to acquire and repurpose two existing hotel/motel properties for permanent, single room occupancy housing. In coordination with the HCHRA, the Hennepin County Facility Services Department will oversee procurement and delivery of construction and rehabilitation services necessary to render the acquired properties suitable for permanent rental housing. Preliminary staff review has identified approximately $1.7 million in necessary construction and rehabilitation work across these two properties. Work will commence upon closing, with occupancy anticipated later this year or early 2023. After final completion of necessary repairs/rehabilitation, the HCHRA will contract with third-parties to lease, operate and manage the newly acquired properties for the provision of low-income housing.

To further advance county disparity reduction efforts, notwithstanding any other law to the contrary, staff recommends that the Chair of the Board and County Administrator be authorized to utilize the set-aside contracting authority under Minn. Stat. § 471.345, Subdivision 8 for any construction and rehabilitation work deemed necessary and appropriate, if the proposals are within the county’s approved budget. Using set-aside authority will enable a portion of the construction work to be delivered by Emerging Small Businesses Enterprise (ESBE) general contractors from the Department of Community Corrections and Rehabilitation’s (DOCCR) Community Productive Day Construction Partnership Program. Contractors are qualified for this program based on their demonstrated success employing and training ex-offenders. The selected ESBE firms will be required to employ probationers during the performance of their contract for not less than 10 percent of the contract’s total labor hours.

Current Request: This request is to authorize the transfer of up to $3,316,000 in pandemic recovery funds to the HCHRA for acquiring/repurposing existing hotel/motel properties for permanent affordable housing; authorize up to $1,700,000 in pandemic recovery funds for property rehabilitation; and authorize the Chair and County Administrator to utilize set-aside contracting authority under Minn. Stat. § 471.345, Subdivision 8 for any construction/rehabilitation work deemed necessary, appropriate, and within the approved budget.

Impact/Outcomes: Acquisition and rehabilitation of these properties will expand the supply of affordable housing for low-income residents.

Housing Domain Disparity: Households of color are disproportionately housing cost burdened. This request creates housing opportunities that will be affordable to households below 30 percent of area median income.