Incentive Fund

North Dakota’s investment in affordable housing is paying dividends for communities struggling to house essential workers, seniors and low-income families.

Since its inception in 2011, North Dakota’s Housing Incentive Fund has awarded nearly $49.2 million to developers to create 1,533 affordable housing units in 25 communities. Funded by businesses and individuals who receive tax credits for their donations, HIF’s role is to reduce investment cost and enable units to be offered at below-market rents.

Six of the 56 projects receiving HIF money have been in Minot.

Mainstreet Artspace Lofts, a 34-unit downtown complex that opened a year ago, will host a grand opening for the public on June 27. Artspace reports the complex is fully occupied with qualified artists as residents. The lower level of the building houses Children’s Music Academy, a gallery operated by the Turtle Mountain Tribal Arts Association and the headquarters for the Minot Area Council of the Arts.

The $9.4 million project received $200,000 from the incentive fund as one of the first projects considered in September 2011.

MetroPlains’ Minot Place Rowhomes has 30 units at 1701-11th St. SE for which HIF allocated $200,000 in 2012. The last of the one- to three-bedroom units became available this past December and all were spoken for before they opened.

Minot Housing Authority rehabilitated seven units in Oakwood Court for people with disabilities following the 2011 flood with the help of $155,600 from HIF.

“Without that incentive fund, it would have been difficult to bring that property back on,” said Mark Austin, director of the housing authority’s occupancy program.

The units, available through referral from the North Central Human Service Center, has been ready for occupancy since last fall. Austin said there have been a couple of vacancies available this spring.

After the flood damaged the building on East Burdick, residents were transferred to other properties, adding to the competition for housing that was fierce due to the flood and influx of people due to oil activity. Austin said the tight housing market is easing in Minot, but there remains a need for affordable units.

Beyond Shelter, which has two affordable housing projects planned in Minot and one in Burlington, is looking for more land in the Minot area for an additional project, said Dan Madler, chief executive officer, Fargo.

The organization wants to, at a minimum, initiate one affordable housing project in 2015, he said. However, if the North Dakota Legislature reauthorizes HIF for another biennium, it may look at doing two or three, he said.

Although housing is becoming more available and rents are stabilizing or declining in Minot, Madler agreed with Austin that the market still has room for more affordable housing.

Based on a market study last January, a three-bedroom unit rents for about $1,600. A three-bedroom unit in Beyond Shelter’s affordable projects rents for $804.

“I am not sure if the market will ever catch up and be able to compete with $804 three-bedroom rent,” Madler said.

In 2013, HIF awarded Beyond Shelter $8.45 million for seven projects in Minot, Burlington, Dickinson and Fargo. The projects would create 257 units valued at $47.2 million. Beyond Shelter also received nearly $1.4 million in 2012 for a 24-unit project in Dickinson.

“Without the Housing Incentive Fund, half of our projects would go away,” Madler said. “It’s been significant in allowing us to double the amount of units and projects we can finance in any given year.”

Beyond Shelter broke ground on on Fieldcrest along 36th Avenue Northeast in May. Ground breaking is scheduled for September on Cook’s Court in south Minot and possibly this fall on The Willows in Burlington if infrastructure is completed there this summer. Minot Housing Authority will manage the three projects once completed.

Fieldcrest is to be finished by June 2014. The $8.3 million development will offer 42 units, of which nine will be reserved for workers employed by a school, medical facility or government agency in an essential public service role. It is backed by $2.3 million from the incentive fund.

The Willows should have 40 workforce and low- to moderate-income family units available in the fall of 2015. Cook’s Court should have 40 senior units available in December 2015. The Willows received $3 million and Cook’s Court $600,000 from the incentive fund.

A share of HIF funding in the current biennium is dedicated to support projects creating housing for essential workers. An essential service worker is defined as someone employed by a city, county, school district, medical or long-term care facility, the state of North Dakota, or others determined by the Housing Finance Agency to fulfill an essential public service.

The $7.5 million Rolling Ridge Estates, being developed by SW Design Build, will offer half of its 48 units to essential service workers.

SW Design Build hasn’t finalized a location in Minot for its project yet, company president Diane Weick said. However, it expects to do so before long.

“Everything is moving forward,” Weick said. “We do want to break ground this construction season.”

HIF awarded Rolling Ridge Estates $200,000 last June.

Projects completed in the region include two 12-plexes in Kenmare, funded by HIF in 2011. The Kenmare Development Corp. built one of the complexes, which opened in November 2012 and is full. Gooseneck Implement built the other complex and makes units available first to employees. Each project received $240,000 in incentive funds.

Jennifer Nelson, executive director for the development corporation, said the 12-plexes have benefited the community by providing housing for people who need a place short-term because they are in the area temporarily or are house shopping.

Divide Vista Apartments in Crosby, one of the first projects funded by HIF, opened in August 2012 and has been full since. Most of the tenants have been essential service workers, said Kaycee Lindsey, community development director.

With market rents at $1,200 to $2,400 for two- or three-bedroom units, any affordable units are full and have waiting lists, Lindsey said. Even the market-rate units get snatched up quickly in Crosby, she said. Within the past couple of years, several market-rate four-plexes went up to serve oil industry workers.

In 2012, St. Luke’s Hospital and Foundation in Crosby received $1 million from HIF that it is using to build an 18-plex and townhomes, creating 24 housing units. The City of Crosby received $762,990 from HIF last fall to build 12 units for workforce and low- to moderate-income family housing. The city has bids out to begin that project.

The city project will include a child-care center on the main level. The community’s existing child-care center needs more space to take more children, and the new center will provide that, Lindsey said. The center will be able to accommodate up to 74 pre-school children and 22 school-age children.

Lindsey said the project is necessary because of the workforce shortage affecting local businesses. By providing affordable housing and increasing the child care availability, the city project could increase the worker pool, she said.

Having a community-generated project also has been critical because of the difficulty in getting outside developers interested in Crosby, she added. The city is installing infrastructure on property that it is making available for commercial development and possibly residential development if it can attract a developer. Lindsey said the commercial development has drawn interest, and Farm Credit Services, which is breaking ground this spring, will be the first to build.

North Dakota’s Housing Incentive Fund has been so popular that it took only two funding rounds in 2013 to commit an entire biennium’s appropriation. There were about $13.6 million in requests that couldn’t be funded due to lack of money. They would have created another 464 housing units.

The 2013 Legislature had reauthorized HIF with a $15.4 million general fund appropriation and authority to issue $20 million in state tax credits by Dec. 31, 2014. The fund reached $20 million in contributions for the tax credits by the end of 2013. Almost 450 contributions were received, with the greatest support coming from the banking community. More than $5 million came from 378 individual taxpayers, with the average household contributing $13,500.