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State seeks help with affordable housing

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State seeks help with affordable housing
Dickinson North Dakota 1815 1st Street West 58602

GRAND FORKS -- 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 Grand Forks 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.

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.

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.

Johnson is a reporter for the Grand Forks Herald, which is owned by Forum Communications Co.