Another shutdown may affect affordable housing near UMN

A renovation of an affordable housing development in Cedar-Riverside could face funding problems with another shutdown.

Jackie Smith, 26, burns leaves outside of her apartment just north of the West Bank campus on Tuesday, Nov. 28. Her building is part of a cluster of townhouses that will be undergoing rehabilitation in 2018.

Carter Blochwitz

Jackie Smith, 26, burns leaves outside of her apartment just north of the West Bank campus on Tuesday, Nov. 28. Her building is part of a cluster of townhouses that will be undergoing rehabilitation in 2018.

Miguel Octavio

Nonprofit developers near the University of Minnesota may face uncertain funding if the federal government shuts down again after the three week temporary opening.

The U.S. Department of Housing and Urban Development, which provides monetary funds to some nonprofit developers across the country, may close again as a result of another shutdown. The Community Housing Development Corporation and the West Bank Community Development Corporation are nonprofit developers near campus. They are working together on a nearly $16 million project to renovate the Riverside Homes in the Cedar-Riverside neighborhood, which is funded in part by HUD. 

The project had to seek alternative funding during the 35-day shutdown and could face additional issues if HUD funding stalls again. 

“The longer [another shutdown] goes on, the longer the consequences we’d probably face,” said David Hoffman-Dachelet, assets manager of West Bank CDC. “But as of right now, we’re OK.”

Part of the contractor and builders’ monthly payments come from HUD. Without HUD funding and oversight during the shutdown, the project’s developers worked with a HUD-approved lender to help pay builders for the month of January. Workers will receive a normal payment for February with the reopening of the federal government, Hoffman-Dachelet said. 

“There’s some flexibility there, but the longer it goes on, the less flexibility there’s going to be,” said Elizabeth Flannery, president of CHDC. “That’s just a real problem for the builders who are working on these projects and not getting paid.”

Flannery said a backlog from the shutdown may also cause further delays from HUD. Prior to the federal government reopening, she said another affordable housing project in Minnesota was put on hold. 

Tim Mungavan, executive director of West Bank CDC, said another shutdown would leave the project’s future uncertain because HUD must approve any changes. 

“If it stays open, it’ll be fine,” Mungavan said. “If it closes down again, we’ll [be] back in the same spot.”

Hoffman-Dachelet said another months-long shutdown may lead the development to turn to resources like other HUD-approved lenders or the City of Minneapolis. 

Aeon, another nonprofit developer based in Minneapolis, is working on a 70-unit, mixed-income housing project in Prospect Park. Alan Arthur, CEO and president of Aeon, said the federal shutdown has not yet affected construction, which is slated to finish this fall. 

“I suppose if the stand-off between Mr. Trump and Congress continues … then it could have a problem for us,” Arthur said. “But so far it hasn’t caused any problems for us at all.”

Aeon, which oversees affordable housing units for around 8,500 residents across the Twin Cities, received enough aid from HUD during the shutdown to pay rent subsidies through February, Arthur said. 

Ward 2 City Council member Cam Gordon said he hopes the Riverside Homes will continue to receive enough funding to complete the project. 

“That’s another example of why the federal government shouldn’t shut down,” Gordon said.