Dalrymple Recommends Greater Support for Affordable Housing
BISMARCK, N.D. – Governor Jack Dalrymple today said the state should enhance its assistance to facilitate greater development of affordable housing in North Dakota's oil-producing counties and in communities throughout the state.
Dalrymple outlined his recommendations to expedite and expand affordable housing construction while hosting the Governor's Housing Update. The forum, held at Great River Energy in Bismarck, brought together bankers, housing developers, state housing officials and community leaders to discuss a recently released statewide housing study and to coordinate efforts for greater housing development. State officials had asked researchers at North Dakota State University to conduct the Statewide Housing Needs Assessment which will help guide the state's short-term and long-term housing development strategy.
"We have much to be thankful for in North Dakota," Dalrymple said. "Our economy is among the strongest in the nation; our population, after decades of decline, has reached an all-time high; businesses across the state are expanding and we have more career opportunities today than ever before.
"To help meet the needs that come with growth, we are making significant progress in the development of traditional housing and low-income housing throughout the state," Dalrymple said. "With projections provided by the new statewide housing study, it's now possible to fine tune our short-term and long-term housing strategies as we all work together to meet those needs"
Since 2010, the North Dakota Housing Finance Agency (NDHFA), under the direction of the North Dakota Industrial Commission, has facilitated the development of nearly 1,300 low-income housing units throughout North Dakota. In the first nine months of 2012, the state has led the development of 740 housing units for low-income residents, surpassing the total development of 521 low-income housing units in the previous two years.
NDHFA Director Mike Anderson largely credits the North Dakota Housing Incentive Fund for the state's significant increase in low-income housing development. Following Dalrymple's recommendation, the Legislature increased the state Housing Incentive Fund to provide for $15 million in tax credits for the development of low-income housing during the current biennium. Ninety percent of the fund, or $13.5 million, is funding projects in the state's oil-producing counties and in federal disaster areas. Contributors receive a state tax credit of equal value to help finance the construction of low-income housing. Dalrymple also encouraged the reallocation of funds at the Bank of North Dakota to support Flex PACE, an incentive to stimulate housing development through low interest loans.
General home construction has steadily increased in North Dakota since 2007, with a major upswing in development beginning in 2009. More than 10,000 housing permits were issued statewide in the last two years, about the same amount issued during the previous three-year period.
The North Dakota Department of Commerce supports the development of affordable housing, utilizing federal HOME program funding and Community Development Block Grant funding to help finance affordable housing projects. Since 2010, the Commerce Department has allocated $3.5 million through these programs in support of the construction and rehabilitation of low-income housing.
Additionally, the Bank of North Dakota (BND) facilitates affordable housing development through several services, including offering Flex PACE buydown loan funds to developers who construct affordable housing units in multi-family projects. A developer can access as much as $300,000 in interest buydown, or $25,000 for each housing unit that is deemed affordable by a local housing authority.
Through a new program called the Sub Participation Program, BND can purchase loans from North Dakota lending institutions that are holding significant loan amounts and sub-sell them to other North Dakota lenders that have a greater loan capacity. The program enables BND to provide a unique benefit by sharing and spreading the credit risk throughout the state while easing loan concentrations.
BND also supports the development of affordable housing through its mortgage origination service. BND can originate and service loans for housing development in underserved areas if referred by local banks that lack the staffing or expertise to provide the loans.
To further help meet the state's current and long-term housing needs, Dalrymple has proposed the following recommendations:
- Providing an additional $12 million in Flex PACE buydown loan funds in the 2013-2015 budget – an investment that will generate an estimated $125 million in private housing development.
- Directing the Bank of North Dakota (BND) to set aside $30 million of its earnings for direct investment in the Housing Incentive Fund, thereby accelerating the availability of funding for low- and moderate-income housing construction during the upcoming biennium.
- Dedicating an additional $20 million in tax credits for the Housing Incentive Fund to bring the total fund to $50 million for development of affordable housing during the 2013-15 biennium.
- Providing an additional $135 million in Energy Impact Grant Funding during the 2013-15 biennium. Cities and other political subdivisions are using the funding to extend sewer lines, build streets and to develop other infrastructure that directly supports the development of residential housing.
- Directing the state Dept. of Commerce to enhance its coordination of shared community planning services for North Dakota political subdivisions that are experiencing planning needs beyond their normal demand. Commerce will roll out a North Dakota Planning Initiative in the near future and will continue to act as the coordinating agency for the initiative.
- Expanding the Homestead Tax Credit for senior citizens and the disabled. Currently, residents over age 65 and disabled citizens may apply to the state tax commissioner to have all or a portion of their property taxes paid by the state on their behalf. Dalrymple recommends expanding the eligibility by eliminating the penalty on those who have saved assets for retirement and by increasing the income threshold for a household to $50,000 per year. Dalrymple recommends increasing Homestead tax relief by disregarding social security benefits in the calculation of the income test. These changes are estimated to save qualifying property tax payers an additional $20 million in property taxes per biennium and will make it more affordable for them to remain in their homes after retirement.
During the Governor's Housing Update, participants discussed the results of the Statewide Housing Needs Assessment. The study projects that the state's population will increase 25 percent by 2025 and that the state's housing demand will increase nearly 30 percent in the same time period. The study, completed by researchers at North Dakota State University, found that the largest growth in housing demand will occur for people in the prime working-age group of 25 to 44.