Housing advocates push to extend bipartisan state tax credit program beyond 2028

Housing advocates, legislators and community members gathered at the Minnesota State Capitol Tuesday to call for the extension of one of the state’s most popular affordable housing programs, a tax credit that has drawn rare bipartisan praise and fueled housing development from the Twin Cities to rural Minnesota.

Few housing programs inspire bipartisan support and touch lives across both metro and rural areas like the State Housing Tax Credit Program and Contribution Fund. Created as part of a sweeping 2023 spending bill, the program allows individuals and companies to contribute between $1,000 and $2 million toward affordable housing developments and receive a tax credit worth 85% of that contribution.

The program is funded entirely through private investment, a structure supporters say has helped drive its rapid success. Demand has consistently outpaced supply. This year, the application portal closed after just two hours, with requests far exceeding the $9.9 million in available credits.

The credit is currently set to expire in 2028, and the press conference on April 28 focused on extending that deadline while refining how the program is distributed statewide.

“We seek to extend this successful program beyond 2028, which is its current sunset, and also strengthen the program’s utilization with statewide geographic balance and ensure it appears with all Minnesota housing programs,” said Elizabeth Glidden, executive director of the Minnesota Housing Project.

Leading the legislative push is Rep. Spencer Igo, a Republican from District 7A and co-chair of the House Housing Committee, a fact supporters say underscores the program’s cross-party appeal.

“I’m really proud to carry the legislation this year to extend the sunset on our tax credit and make changes that are going to make it even better for the state of Minnesota,” Igo said.

Supporters are calling for increasing the contribution cap to meet demand, better aligning the credit with other state housing programs and urging lawmakers to act quickly to preserve projects already in development. The program’s flexibility allows donors to direct contributions to specific projects, creating a sense of ownership and encouraging innovation in how developments are built and financed.

That impact is visible in communities like Alexandria, where Habitat for Humanity of Douglas County is using the funding to support a large-scale housing development.

“We are building 42 homes over the next five to six years,” said Christine Riley, executive director of the organization. “Last year, building started. We have hopes to be closing two more in the very near future, and this year we are building six homes in that development. As we gather here today in Alexandria, siding is going up on the first house, so we’re excited about that.”

Beyond increasing housing supply, the program has also opened the door to creative partnerships. Donor Bill Wernz described how extreme weather in 2023 prompted him to connect affordable housing development with environmental goals.

“In the summer of 2023, one day it was 100 degrees and there was Canadian smoke,” Wernz said. “I said to myself, I’ve never really done anything significant for the environment. I’ll have to see what I can do. And I started talking to people, researching on the internet, and found an idea that depended on the State Housing Tax Credit.”

Wernz approached developers with a proposal tied directly to energy savings for residents.

“I said to them, ‘If I raise money under this tax credit program, will you use it for solar installations on new affordable housing, and will you also reduce the amount charged to residents by the amount of the electrical savings?’ And they said yes,” he said.

Advocates say examples like that illustrate the program’s broader potential, not just to build housing, but to shape how that housing serves communities long term.

Since its launch in October 2023, the program has drawn contributions from more than 1,100 individuals and companies, supporting dozens of housing projects across urban, suburban and rural Minnesota. Each year, available credits have been fully claimed, signaling sustained demand.

Legislation to extend the program beyond 2028 and adjust how credits are distributed geographically is currently moving through committees in both chambers. Supporters argue that without action, one of the state’s most effective housing tools could disappear just as it is gaining momentum.

“This is one of those rare programs,” one advocate said after the event, “where you can see the impact in every corner of the state.”

For more information, visit https://www.mnhousing.gov/home/rental-housing/housing-development-and-capital-programs/deferred-loans-and-grant-programs/state-housing-tax-credit-shtc.

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