State of North Dakota seeks help with affordable housing

A newly established tax credit program could begin to address the growing shortage of affordable rental housing in the oil boom communities of western North Dakota, administrators said Wednesday.

Mike Anderson, executive director of the North Dakota Housing Finance Agency, told the Herald's editorial board that the program is "new territory" for the state because it provides flexible funding to help developers build new apartments in communities that have seen the price of rent skyrocket in recent years.

"Now we've got a state tool to work with, and we're pretty excited about it," he said.

The Legislature approved the $4 million Housing Incentive Fund this spring, which offers dollar-for-dollar state tax reductions for individuals, businesses and corporations that contribute to the fund.

"By giving it to us, in essence you actually have the capability of saying where you want some of your tax dollars to go," he said.

Lawmakers expanded the plan during last month's special session, giving the Housing Finance Agency the authority to issue as much as $15 million in tax credits during 2011 and 2012.

'Dire need'

Anderson said the state has been able to use federal tax credits to help developers meet the demand for affordable housing. That funding comes with strict requirements that force the new rental units to be reserved for low-income tenants.

But he said those conditions often make it impossible to use federal money to help address the housing shortage for another group of residents -- the "Main Street" workers at restaurants, retail stores and offices who do not earn as much as the new oil workers in the community.

"The state recognizes that supply and demand normal market forces are not going to help low and moderate income households and fixed-income seniors, and that is not getting done," he said. "In fact, existing housing is actually going up to the market rates where people are being pushed out of their existing housing."

The Housing Incentive Fund instead will provide flexible funding of up to 30 percent of the construction cost for new apartment and rental units. In exchange, developers will commit to keeping the rent for those units affordable for low and moderate-income families.

"This is an attempt to kind of balance the housing development in those areas where there's a dire need for it," Anderson said.

'Good first step'

Anderson said the new funding could spur development of mixed-income housing, which would be a more feasible way of attracting new rental units that are affordable. Some units in a new building could target low and moderate income tenants and qualify for the assistance, while others could be rented out at market value rates to keep the project profitable.

As much as $15 million could be awarded over the next two years. Ninety percent of the funding is set aside for counties impacted by oil and gas development and communities affected by devastating floods this summer, including Minot.

Anderson said his agency wants to start funding new development as soon as next spring.

But the amount of help for builders will depend on how much taxpayers contribute in exchange for a tax reduction -- there is no state allocation for the program, meaning there is no guaranteed money to launch it.

Anderson said several people have contributed already, and a western North Dakota company made a commitment Wednesday to give $225,000. Any contributions before the end of the year will qualify for a 2011 state tax reduction.

Max Wetz, director of public affairs for the Housing Finance Agency, said the fund will help begin to address the new housing problems.

"It's not going to solve all of the housing issues out there and we recognize that," he said. "But it's a good first step."

Anderson said the program is "a new step" for the state and its taxpayers. But the fund is only authorized for the 2011-2013 biennium, and the Legislature will have to agree to it again in two years to keep it going.

"Legislators understand today that we can't rely on federal programs and we can't rely on market forces," he said. "In terms of quality of life, housing is a big part of that equation. So we need to step up to the plate and play some role in doing this."

Learn more about the Housing Incentive Fund at www.NDHousingIncentiveFund.org.

Reach Johnson at (701) 780-1105; (800) 477-6572, ext. 105; or send email to rjohnson@gfherald.com .