Bridging the Divide: The Power of Public Funding in Affordable Housing

Guest blog by Sydney Schulz
Project Funding Associate

To power the mission of Twin Cities Habitat for Humanity, we rely on funding from a wide range of partners: individual donors, corporate or faith sponsors, foundations, and public sector funding. In the complex world of affordable housing, securing public funding is not just a financial necessity but a crucial advocacy effort. Twin Cities Habitat stands as a driving force in this dynamic intersection, strategically utilizing county, state, and federal funds to address the affordability gap for homebuyers and bridge the value gap as housing developers.

Understanding the Affordability Gap

The affordability gap represents the difference between the cost of a home and what a homebuyer can realistically afford. For many, this gap can seem insurmountable, preventing the dream of homeownership from coming true. It’s a persistent and growing challenge in the realm of housing. Twin Cities Habitat recognizes this challenge and strategically uses county and federal funds to bridge this divide, making housing not just a dream but a tangible reality.

Navigating the Value Gap

While Twin Cities Habitat champions the cause of affordable homeownership, it also wears the hat of developer, undertaking projects that contribute to the housing stock in the community. As developers, we grapple with the value gap—the difference between the cost of building or rehabilitating a property and its market value. This is where the synergy between county and federal funds becomes crucial. 

County Funds - Tailoring Solutions to Local Realities

Twin Cities Habitat operates within the seven-county metro area in Minnesota: Hennepin, Ramsey, Dakota, Anoka, Washington, Carver, and Scott. Each county brings its unique challenges and opportunities to the table. Rising land costs, zoning restrictions, and community dynamics vary from one county to another. To address these intricacies, we tap into county funds strategically, tailoring solutions to the specific needs of each community.

Federal Funds - Advocacy as a Catalyst

At the core of Twin Cities Habitat’s funding strategy are federal resources, including the HOME Investment Partnership (HOME) and Community Block Grant Development (CDBG). (learn more here.) These resources are overseen by the U.S. Department of Housing and Urban Development (HUD). At Habitat, we don’t just advocate to be able to use these funds; we advocate to increase the allocation of these critical funds. By amplifying the impact of federal resources, Twin Cities Habitat advocates for the scaling up of affordable housing initiatives, emphasizing the vital role of federal funding in creating lasting community change.

MHFA Funding - A Collaborative Approach

In addition to federal funds, we utilize funds provided by the Minnesota Housing Finance Agency (MHFA). MHFA, a state entity dedicated to advancing affordable housing in Minnesota, offers unique funding mechanisms that complement federal resources. We actively engage with MHFA to explore avenues that align with our mission, further diversifying our funding portfolio.

Project Funding Team - Architects of Strategic Allocation

Behind the scenes, Twin Cities Habitat has a Project Funding Team that serves as the architects of strategic resource allocation. This team plays a pivotal role in identifying funding opportunities, navigating application processes, and ensuring that funds are administered in a way that maximizes their impact. Their work involves not only securing funding for individual projects but also aligning these projects with broader advocacy goals.

The Need for Advocacy to Expand Funding Options

Twin Cities Habitat recognizes that advocating for expanded funding options is essential to meeting the diverse and evolving needs of the community. This involves active engagement with policymakers, participation in community forums, and amplifying the voices of those affected by the affordable housing crisis – especially those of Foundational Black households. By advocating for innovative financing tools and increased funding, Habitat strives not only to use existing sources effectively but also to pave the way for a future where affordable homeownership is accessible to all.

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