Housing Trust Fund Advisory Committee report.

Informational

To provide an update on the Affordable Housing Trust Fund (HTF), including the status of Statewide Affordable Housing Aid (SAHA) funds, upcoming funding requests, and long-term sustainability planning. This report also previews anticipated items that may require EDA action in the coming months.

BACKGROUND

The City of Mankato receives annual allocations of SAHA funds, which are deposited into the HTF to support affordable housing initiatives. Recent state guidance clarifies that these funds must be formally committed and expended within specific timelines, even after being deposited into the HTF. Extensions may be granted if funds are allocated but not fully spent by the deadline.

Current Status of SAHA Funds

• 2023 SAHA funds ($288,957): Committed to the PCLT for affordable housing development. The City has pledged $500,000 to support 20 new homes (construction in 2026, sale in 2027), with $300,000 in matching funds from LHFT grants.
• 2024 SAHA funds ($288,957): Must be committed by December 31, 2027. Staff are preparing proposals to ensure timely commitment and expenditure.

ANTICIPATED UPCOMING FUNDING REQUESTS FOR EDA CONSIDERATION
 
1. Homestead Apartments – Post-Flood Preservation
In July 2025, flooding displaced 40 families and damaged 40 of 120 affordable units. Insurance will cover most of the $3.34 million in damages, but a $441,156 deductible and at least $125,000 in unreimbursed costs remain. Additional expenses may reach $1 million due to scope.

Financial Impact:

• Daily mitigation: $4,155–$5,802
• Lost rent: $26,000/month
• Fixed expenses: $40,000–$50,000/month
• Total monthly cash drain: Over $200,000
   

SWMHP Requests:

• Cost-sharing for an engineering study to evaluate and propose modifications, if applicable, to the stormwater system.
• Financial support (HTF, CDBG) for remediation and deductible

2. Connections Shelter – Year-Round Nighttime Operations
The HTF Advisory Committee, in collaboration with local shelter providers, has identified year-round nighttime shelter as the community’s most urgent need. This aligns with the City’s Strategic Plan and Affordable Housing Action Plan.

Anticipated Request:
$150,000 annually for two years ($300,000 total) to support expanded operations while Connections Shelter seeks additional state funding.

3. Trellis Co. – Supportive Services at Poplar Apartments
The Poplar Apartments project, supported by the City and Blue Earth County, will provide supportive housing to address homelessness. Due to federal funding cuts, local support is needed to sustain services.

Anticipated Request:
Funding for a service reserve or ongoing operations. Construction begins in 2026; services launch in 2027. A detailed proposal will be submitted in 2026.

LOCAL FUNDING COMMITMENTS
To comply with SAHA requirements, the City demonstrated continued local investment by using EDA general funds to support PCLT Phases I and II in 2023 and 2024. This ensures SAHA funds supplement, rather than replace, local funding.

LONG-TERM SUSTAINABILITY PLANNING
The HTF Advisory Committee is evaluating strategies to ensure the long-term viability of the fund, including:

• Investment strategies to generate interest
• Potential revenue sources: EDA general funds, EDA levy, RAD reserves

Recommendations will be brought forward for EDA consideration in 2026.

NEXT STEPS

• Staff will prepare detailed funding proposals for EDA review and action in early 2026.
• The HTF Advisory Committee will continue to evaluate long-term funding strategies.
• Coordination with SWMHP, Connections Shelter, Trellis Co., and other partners will continue to ensure timely and strategic use of HTF resources.