WORTHINGTON - Worthington Director of Community and Economic Development Brad Chapulis testified last week in support of the Workforce Housing Tax Credits bill to the Minnesota Senate’s State and Local Government Committee. 

The bill is sponsored by Greater Minnesota Partnership, a non-profit organization in which the city of Worthington is a member. The bill was created in hopes of helping mend the broken housing market that rural Minnesota is facing.

“(By testifying) we are trying to paint the picture of how dire of a need it is to have the state be part of the solution,” Chapulis said. “Locally, we don’t have the power or ability to address this large issue. This issue hasn’t yet, but has the ability to, stifle our economic stability.”

Currently Worthington, much like other rural towns in Minnesota, is facing a zero percent vacancy rate in rentals. This hinders economic and population growth, Chapulis said.

Housing issues have not occurred overnight but have grown slowly over the years, and they continue to grow as Worthington’s population increases. The bill would help Worthington and other towns facing the same issue by allowing developers a state income tax credit.

“The thought process for this bill is whenever government wants a private sector investment, to push money into an industry they put tax credits out there,” explained Chapulis, who testified before the committee on March 17. “(It’s) no different than wind energy. … We are looking at this as a market that is broken, and having tax credits could push that market back to become a viable market that doesn’t need the public assistance to keep going.”

A housing needs assessment performed by the city in 2013 identified that Worthington needs 500 new housing units in the market by 2020 in order maintain the direction of growth experienced over the last 20 years.

“The city of Worthington is trying to address our housing needs,” Chapulis said. “What I did on the 17th was the city’s part in trying to make sure that workforce housing stays a top priority at the state level because the state is impacted by this dilemma as well.”

The Workforce Housing Credit Bill would:

  • Create a state income tax credit to incentivize private investment ($30 million/year) allowing investors to receive a 50 percent tax credit up to $1 million.
  • Make a Workforce Housing Fund to provide grants for construction, acquisition, rehabilitation, demolition, removal and development, including cost of infrastructure necessary for the creation and production of workforce rental housing in Greater Minnesota ($20 million/year).
  • Projects require a 50 percent match with non-state dollars.
  • Project will be located in Greater Minnesota communities with a significant number of jobs per capita, with an extremely low rental vacancy rate and with more than 500 jobs.
  • Provide an Office of Workforce Housing in DEED to administer the state Workforce Housing Fund, provide expertise and assistance to rural communities and developers, and ensure that a lack of workforce housing is no longer an impediment to economic growth in Greater Minnesota.

This information was made available by Flaherty & Hood, P.A. for the Coalition of Greater Minnesota Cities and Greater Minnesota Partnership, 3/5/2015.