Rent assistance vouchers for 220,000 Minnesota households proposed at Capitol

A first-of-its-kind rent voucher proposal that could help 220,000 Minnesota households is percolating at the State Capitol.

The program would cost roughly $1.7 billion each year — about 6% of the current state budget — and reduce the number of people who have languished on waitlists for housing subsidies through a government program known as Section 8.

"That would drastically change my life. I wouldn't have to worry about, 'Oh, can I afford these groceries?' " said housing advocate Theresa Dolata,who said she spends 70% of her Social Security disability check on her Minneapolis apartment. She has been on the Section 8 waitlist for almost four years and anticipates she could wait another decade.

Key legislators in the Democrat-controlled House and Senate back the assistance program, which would ensure low-income Minnesotans don't spend more than 30% of their income on rent. It is one of many housing-related spending and policy changes that lawmakers are considering given the $17.6 billion budget surplus and what officials stress is a worsening housing crisis.

Many Minnesotans' inability to afford rent is one piece of a troubling housing problem: The state doesn't have enough housing to meet demand; there is a massive racial gap in homeownership; some people spend freezing nights in homeless encampments or sleep on friends' couches or in shelters.

Lawmakers are considering a suite of options to help, including increasing down payment assistance, changing zoning restrictions, altering eviction policies and spending and borrowing more to maintain existing affordable housing and help build new properties.

More details on spending plans and potential differences within DFL ranks will emerge after Gov. Tim Walz releases his budget in the next couple of weeks. Rental assistance will be part of the budget, Lt. Gov. Peggy Flanagan said Wednesday, but she and Walz would not comment on the scale of what they will propose. The state already provides some assistance for families without housing or at risk of homelessness.

"We are in a unique and an incredibly important position," Walz told housing activists who packed the Capitol rotunda Wednesday and chanted their demand that Minnesota spend $2 billion on housing this year.

For years, state leaders have not passed "transformational" spending on housing needs, the governor said, but now they have the political will and economic ability. Last year, he proposed $450 million for affordable housing projects, but the plan did not pass a divided Legislature.

"It is not good enough to say we want to eliminate homelessness and provide stability. We must lay out a plan on how to get there that is measurable and most importantly is fully funded to make it happen," Walz said.

However, demand for state dollars far outweighs the available surplus, and the rent voucher program would be a permanent spending commitment after the surplus is gone, state Housing Commissioner Jennifer Ho said. She said she supports the idea "absolutely in spirit" but has many technical questions about how it would work and her agency's potential oversight role.

Unlike the temporary federally funded RentHelpMN program during the pandemic, the voucher program would not be run by the state housing agency. Instead, it would channel dollars to the many local housing authorities that already administer the Section 8 program.

Minnesotans would qualify for the help if they spend more than 30% of their income on rent and earn up to 50% of the area median income, or $58,650 for a family of four in the Twin Cities. The state would cover anything greater than that 30%.

The program could be phased in, said Ben Helvick Anderson with Beacon Interfaith Housing Collaborative, which is helping lead the voucher push dubbed "Bring it Home." He said the vouchers would reduce government costs in other areas and give developers more confidence that they would be able to collect rent when they build affordable housing.

Housing authorities are on board with the voucher proposal but also want to see significant borrowing and spending to produce and preserve affordable housing, said Shannon Guernsey, executive director of the Minnesota chapter of the National Association of Housing and Redevelopment Officials.

Housing First Minnesota, a trade association representing the building industry, also supports funding for programs like rent assistance, lobbyist Mark Foster said. But if state leaders fail to pair new investment with policy reforms, he said, they are "treating the symptoms and ignoring the actual disease."

For years, the state did not build enough affordable housing, largely because of land use laws, Foster said. His group supports a bill Rep. Steve Elkins, DFL-Bloomington, plans to introduce again that would make numerous changes to spur more development, including overriding cities' zoning laws to allow homes to be built on smaller lots.

Some advocates are also pushing to alter eviction rules. Housing Committee Chair Rep. Mike Howard, DFL-Richfield, said legislators are considering a 14-day pre-eviction notice requirement, eviction expungement and a law to prevent landlords from discriminating against someone with a Section 8 voucher.

Minnesota landlords filed for 18,855 evictions in 2022, the most in nearly a decade. In both 2020 and 2021, when the state paused evictions and was distributing the bulk of the pandemic-era RentHelpMN money, landlords filed around 4,000 evictions.

"We've seen evictions skyrocket," Howard told housing committee members at a hearing this week. "The need didn't go away, but the resource did."

Data editor MaryJo Webster contributed to this report.