Housing and Redevelopment Authority Meeting Date: March 10, 2026
To: Members of the Housing and Redevelopment Authority
From: Melissa Hanson, Housing Coordinator
Title
Local Housing Trust Fund Discussion
Body
Action Requested:
Discuss the adoption of a Local Housing Trust Fund (LHTF) Policy to enable reimbursement from Minnesota Housing Finance Agency (MHFA), update existing Down Payment Assistance and Home Rehabilitation Loan programs, and establish basic program and funding parameters.
Summary Report:
Ordinance No. 1034, adopted by the City Council on April 19, 2022, established a Local Housing Trust Fund and designated the Housing and Redevelopment Authority (HRA) to administer the fund on behalf of the City. The prior HRA established a subcommittee to establish policy and the redlined version is included. In June 2025, the HRA was awarded $150,000 from the Minnesota Housing Finance Agency (MHFA) to support the LHTF. These funds are provided on a reimbursement basis.
Due to the structure of the MHFA application, the awarded funds are restricted to use for down payment assistance and home rehabilitation loans. As part of due diligence, MHFA requires the HRA to adopt a formal Local Housing Trust Fund policy that clearly defines eligible uses, program structure, and administrative procedures.
Need for Policy Adoption:
Adoption of a Local Housing Trust Fund Policy is necessary for the following reasons:
1. MHFA Reimbursement Compliance
MHFA requires a locally adopted policy outlining program purpose, eligibility, and use of funds before reimbursement requests can be processed. Without an adopted policy, the HRA cannot access the awarded funds.
2. Program Updates and Alignment
The City’s existing Down Payment Assistance and Home Rehabilitation Loan programs predate the MHFA award and do not fully align with current funding requirements. The policy will provide direction for updating these programs to ensure compliance with MHFA guidelines while maintaining consistency with local housing goals.
3. Establishing Clear Program Parameters
The policy establishes baseline parameters for the Local Housing Trust Fund, including:
o Eligible activities (down payment assistance and home rehabilitation loans)
o Income eligibility and general affordability targets
o Funding limits and basic loan terms
o Administrative roles and responsibilities
o Use of funds on a reimbursement basis
These parameters provide transparency, consistency, and accountability in the administration of housing funds.
Policy Review and Implementation
The draft Local Housing Trust Fund Policy is being presented for review to ensure it reflects Council and HRA priorities. Upon adoption, staff will proceed with updating program materials, implementing the revised programs, and submitting reimbursement requests to MHFA as eligible expenditures are incurred.
City Plans & Policies Relevance:
Adoption of the Local Housing Trust Fund Policy directly advances priorities identified in the City’s adopted Comprehensive and Strategic Plans, which call for flexible local funding tools to support housing stability, expand homeownership, and preserve existing housing stock. The Plans specifically identifies down payment assistance and home rehabilitation financing as key strategies to address affordability gaps, substandard conditions, and the needs of aging homeowners. The proposed policy establishes the mechanism to implement these strategies, align existing programs with funding requirements, and leverage state resources to maximize local impact.
Attachment 1 - Ordinance No. 1034
Attachment 2 - Local Housing Trust Fund policy
Attachment 3 - Redlined Local Housing Trust Fund policy
Attachment 4 - 2026 Local Housing Trust Fund Menu
Alternative Options:
N/A
Financial Impacts:
Adopting a Local Housing Trust Fund Policy is a required and necessary step to access awarded MHFA funds, modernize existing housing programs, and establish a clear framework for administering local housing resources. This action supports the City’s broader housing objectives and ensures effective stewardship of state and local funds.
Tentative Timelines:
August 31, 2021 - Local Housing Trust Fund (LHTF) presentation to HRA
November 2, 2021 - LHTF presentation to City Council
January 18, 2022 - Follow-up LHTF presentation to City Council
April 2022 - LHTF ordinance number 1034 established by City Council
October 17, 2023 - LHTF Subcommittee meeting
January 15, 2024 - LHTF Subcommittee and Property Disposition Subcommittee meeting
July 24, 2024 - LHTF Subcommittee meeting
August 21, 2024 - LHTF Subcommittee meeting
March 19, 2025 - LHTF Matching Funds Grant Application Submitted to MHFA
June 2, 2025 - MHFA informs HRA that application for matching funds of $150,000 has been approved
March 10, 2026 - City Council to review proposed LHTF policy and provide feedback
April 21, 2026 - City Council to approve LHTF policy