task force principles · •cities, states compete to attract mobile jobs-creating entities – big...
TRANSCRIPT
Task Force Meeting #3
April 20, 2018
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Today’s Agenda
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9:00 a.m. Welcome and Introductions
9:15 a.m. Debrief on Community Solutions Event
9:35 a.m. Presentation by David Smith
10:55 a.m. Break
11:10 a.m. Work Group reports
12:00 p.m. Lunch Break
12:30 p.m. Overview of Task Force report structure and key Elements
12:40 p.m. Discuss recommendation ideas from the work groups
1:50 p.m. Next Steps and Wrap Up
2:00 p.m. Adjourn
“Future of Housing” Community Event
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• About 75 people attended • Small table conversations focused on shared housing stories,
identification of housing issues, and brainstorming ideas and solutions
Task Force Guest – David Smith
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David has 35 years of experience with complex affordable housing transactions, programs, and policies, and a global reputation for creativity, insight, adaptive innovation, passion and problem-solving.
Founder and CEO of Affordable Housing Institute Chairman of Recap Real Estate
Slide 5, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Inventing new housing paradigms Without ever leaving the state
Minnesota Governors Housing Task Force St. Paul, MN
9:30 am Friday, 20 April 2018
Slide 6, 4/20/2018 www.recapadvisors.com
Structure of this session
• Part 1: Housing is the glue • Part 2: Resources in search of solutions
• Part 3: Solutions in search of resources
• Part 4: Housing paradigms housing value chains
• Part 5: How to design viable housing program solutions
• Discussion
Slide 7, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Part 1: Housing is the glue
“No sustainable cities without urban affordable housing”
Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018
Slide 8, 4/20/2018 www.recapadvisors.com
The 4+1 engines of sustainable jobs
• Communities fail unless cities grow – Economically, demographically, socially – More jobs, more people, more connectedness – 21st century cities grow with ‘sustainable’ jobs
• ‘Sustainable job engines’ come in 4+1 types
– Usually in this order of development/ priority
1. Education
– Especially graduate students and foreigners
2. Health – Where the world’s elite come to get repaired
3. Technology innovation – Job creation via the internet
4. Government – Where the output is laws and money
5. Leisure/ tourism – Where the product is memories
Slide 9, 4/20/2018 www.recapadvisors.com
Housing is where community meets household
Communities
Households
• Affordable housing anchors communities • ‘Green sustainable cities’ urban affordable
housing
• Housing touches everything • Jobs, transport, health, safety, community
• Scale of success is neighborhood-plus • Time test of success is capital reinvestment
• Affordability is end objective in itself • ‘Decent, safe, and sanitary’
• Scale of success is the property • Time test of success is property viability • Households start out independent
• Affordability is just start • “Housing plus services” • Housing is the platform for improvement • People are less than independent
• Scale of success is person or household • Time test of success is life improvement
Affordable housing
Slide 10, 4/20/2018 www.recapadvisors.com
The housing policy inversion Politics, policy, and innovation
• Housing’s ‘magnetic field’ reversed – 1966 (HUD) 1986, top down – 1986 (LIHTC) 2008, side to side ↔ – 2009 (crash) Now, bottom up ↑
• Housing influenced by 3 levels of government
– National: Income tax, interest rates – State: State tax, LIHTC allocation – Local: Sales tax, zoning, development barriers
• Cities, states compete to attract mobile jobs-creating entities
– Big 4 of ‘clean cool jobs’ (education, tech, health, government) – Law of sustainable cities: 1=1+1
• Add +1 job Add +1 housing and +1 daily commute
• America does not have a national affordable housing crisis
– National epidemic of distinct state/ local affordable housing crises
Slide 11, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Part 2: Resources in search of solutions Social savers, economic aspirants, community vitalizers
Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018
Slide 12, 4/20/2018 www.recapadvisors.com
Urgent challenges in affordable housing/ 1 Unsolved problems in search of solutions
The ‘social savers’ group Helping taxpayers by helping those in need
1. Elderly retrofit to extend healthspan
– ‘Nursing home aversion’ by non-medical caring
2. Permanent supportive housing for chronically homeless
– Bringing help home
3. Veterans’ recovery campus
– “Emotional demobilization”
4. Formerly incarcerated
– 2,250,000 in prison, 4,750,000 on probation/ parole
5. Aging out of foster care – Unready for economically independent adult life
Slide 13, 4/20/2018 www.recapadvisors.com
Urgent challenges in affordable housing/ 2 Gaps in our resource/ subsidy/ delivery ecosystem
The ‘economic aspirations’ group Growing economy by growing affordable homes 6. Workforce housing
– Above LIHTC, below market-income
7. Employer-assisted housing
– People who can’t get to their job won’t take the job
8. ‘Off-campus’ dormitories: grow campus, not spillover
– Universities are ‘sustainable urban jobs’ engines
9. Entrepreneurial rooming houses – If ‘WeWork’ is a business incubator, why isn’t ‘WeLive’ an
entrepreneur’s incubator?
10.‘Refugee landing pads’
– Turn refugees into productive Americans – Their little place in the land of opportunity
Slide 14, 4/20/2018 www.recapadvisors.com
Urgent challenges in affordable housing/ 3 Which of these are priorities in Minnesota?
The ‘community vitalizer’ group Housing stabilizes de-stabilizing communities 11.Orphan properties
– Aging, obsolescent, de-motivated … yet essential
12.Operator-owned mobile home parks
– The largest single form of affordable housing
13.Foreclosure homesteading – Curing the ‘urban chicken pox’ one home, one block at a time
14.‘Flats over shops’ (Living Main Street) – Storefronts vacant by day downtown dead at night
15.Accessory Dwelling Units (ADU’s) – The family member you want close … but not too close
16.Naturally Occurring Affordable Housing (NOAHI’s) – Vaccinating against ‘market eviction’
Slide 15, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Part 3:
Solutions in search of resources “The solution is its salesware”
Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018
Slide 16, 4/20/2018 www.recapadvisors.com
Veterans’ recovery campus Example: Soldier On, Pittsfield
• The big idea – A veterans’ only complex/ community for ‘post-
graduate’ education into independence
• How it works – Custom-design campus facility (‘safe inside’) – Housing plus services – Tap VASH – Reorient with job training, skills training
• Why is it better? – A safe space to learn how to be independent – Peers help peers reinforce independence-behaviors
• Graduates return to the campus as role models
– Once created, it attracts resources
• Adult-education and similar programs
• Goods, volunteers, advocates, contributors
• And it works! – http://www.wesoldieron.org/ – http://centuryvillages.org/
Slide 17, 4/20/2018 www.recapadvisors.com
‘Living Main Street’ Flats over shops for newcomer family businesses
• The big idea – Revive ‘the old Main Street’ – Mixed-use, mixed-tenure, mixed-income
• How it works – Renovate older properties in smaller downtowns
• Retail/ commercial on the ground floor
• Flats above
– Underwrite three streams of income
• + Family-owner’s household income
• + Rental from tenants
• + Commercial rental from ground floor
• Why is it better? – Employs the whole family
• A class immigrant-entrepreneurial-assimilation path
– American aspirational model for 150 years – “Eyes on the street” 24/7
• Jane Jacobs, Oscar Newman, Defensible Space
• Concept note available – Email [email protected]
Slide 18, 4/20/2018 www.recapadvisors.com
Homestead Scholarship Turn student debt into home mortgage debt
• The big idea – Swap student debt for mortgage debt
• How it works – Recent-grad borrower buys home in target
neighborhood
• HFA finances 90% of price + 75% of renovations
– Borrower commits to live there 5 years – Philanthropy/ agency funds a Homestead
Scholarship Payment
• 3 years’ worth of student debt over 5 years
– 100%, 80%, 60%, 40%, 20%
• Why is it better? – Student loan 5x Mortgage loan
• Same payments: 8% 4%, 10 years 30 years
– Stabilizes inner-urban neighborhoods – Gets young people into homeownership faster
• Creates new entrepreneurial landlords
• Concept note available – Email [email protected]
Slide 19, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Part 4: Housing paradigms Housing value chains “The solution is its salesware”
Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018
© 2015 Affordable Housing Institute: all rights reserved
Housing markets work only when value chains work And when the value chains work, they’re invisible
20-Apr-18 20
• Households want quality housing
• May be “effective demand” • Need financing • Need down payments
• Homes are developed • Built, ready for move in • Designed to meet need • Priced to match market
• Household • Loan • Home • At same time
© 2015 Affordable Housing Institute: all rights reserved
Two value chains must meet at a closing Called ‘offtake’ for the developer
20-Apr-18 21
• Household wants home • Can pay for home • Ready to move in
• Home can be moved into • Home can be sold • Price recoups capital • Developer cashes profit
• Household walks away with keys, obligations
© 2015 Affordable Housing Institute: all rights reserved
In functioning markets, all 16 links connect together Demand side, supply side, for each household type
20-Apr-18 22
• Many actors along the way
• Many handoffs
• Each relies on the next
• Developers always looking for opportunity
• Find a new customer-price niche
• Government enables or disables
• Regulates • Incentivizes
© 2015 Affordable Housing Institute: all rights reserved
If any link doesn’t work, the value chain is ‘broken’ And in many (most?) markets, one or more links doesn’t work
20-Apr-18 23
• If even one supply-side link is broken
• Homes aren’t created
• If even one demand-side link is broken
• People can’t borrow to buy
• If several links are broken at the same time …
• Problem may seem insoluble
• Solution: Analyze each value chain by observation • Identify missing links, weak links, uneconomic handoffs • Make ‘maxi-min’ changes at the weak links only
Affordable Housing Institute www.affordablehousinginstitute.org 20-Apr-18 // Slide 24
David A. Smith [email protected] +1 (617) 502-5913
Part 5: How to design
housing program solutions Map the value chains
Find the hidden treasure
Minnesota Governors Housing Task Force St. Paul, MN 9:30 am Friday, 20 April 2018
Affordable Housing Institute www.affordablehousinginstitute.org 20-Apr-18 // Slide 25
Affordable housing resources come in many forms
Cash
1. Grants
2. Hard debt, high leverage
3. Hard debt, interest subsidy
4. Soft debt
5. Hard equity
6. Soft equity
7. Operating subsidy
8. Redirective subsidy
Non-cash
1. Land (cheap or free)
2. Zoning and density
3. Trunk infrastructure
4. Site infrastructure
5. Cheap utility rates
6. Credit enhancement
7. Sales tax relief on building materials
8. Ongoing real estate tax relief
Every political jurisdiction has a distinctive mix – what is yours? Always design programs and business models around your unique mix
Slide 26, 4/20/2018 www.recapadvisors.com
Inventory state and local resources (non-cash)
Supply side
• Land: state owned, city owned – Path of TOD, brownfield remediation
• Land value capture
• Vacant buildings, under-occupied buildings – Relocate municipal tenants, reposition for higher/ better use
• Upzoning/ inclusionary zoning – Density bonus for affordable housing
• Transferable Development Rights
• Configurations (more than just microunits) – Reinvent room-bath-kitchen (RBK) – Reinvent boarding house/ entrepreneurial dormitory/ WeLive
• Risk assumption/ mitigation – Co-develop, land lease, bulk offtake commitment
• Construction – Modular/ prefab – Green tax credits, state tax credits (don’t parrot LIHTC) – Davis-Bacon exemptions (above percentage affordable)
Slide 27, 4/20/2018 www.recapadvisors.com
Inventory state and local resources (non-cash)
Demand side
• Eligibility: Which populations to target? – What is their specialized ‘housing-plus’ need?
• Aggregation of demand – Employer-assisted housing: long history
• Subsidy – Who are their benefactors/ external funders (e.g. Medicaid, VA)? – HCV’s,§1115 waivers, VASH, down payment assistance – Employer match/ forgivable loan
• Credit underwriting – Mitigating risk of non-payment – ‘Secure tenure with the potential for homeownership’
• Rent-to-own? Shared appreciation?
• Funding: Lower cost of capital Lower cost to consumer – Liquidity via bonds, MHFA, Opportunity Zone funds
• Contributed assets? Concessionary loans?
• Servicing – Payroll deduction at source
• Enforcement – Adjustable payments/ flexible loan tenor
Slide 28, 4/20/2018 www.recapadvisors.com
Summarizing … “The best way to predict the future is to invent it”
1. Housing is the glue a. Urban affordable housing Growing sustainable urban economies
2. Housing matters for what it does
a. Strengthens diverse communities b. Revitalizes job-losing downtowns c. Turns sheepskin serfs into urban homesteaders
3. Pick a solution worth solving … and solve it
a. Laws & money & solution idea = Impact b. Risk-takers’ innovation = New solutions
4. Map your value chains by desired solution typology
a. Weak links, broken links b. Where are the hidden costs? The non-cash resources?
5. Build a prototype Create political demand
Slide 29, 4/20/2018 www.recapadvisors.com
Subscribe to State of the Market Email [email protected]
Discussion
Slide 30, 4/20/2018 www.recapadvisors.com
David A. Smith [email protected] +1 (617) 502-5913
Inventing new housing paradigms Without ever leaving the state
Minnesota Governors Housing Task Force St. Paul, MN
9:30 am Friday, 20 April 2018
Work Group reports to Task Force
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The three work groups will provide an overview of: • Topics covered and remaining for their work group • Recommendation ideas* that have emerged so far • Innovation or “stretch” ideas they’ve identified * The recommendation ideas are a starting point for conversation by the Task Force and do not represent formally proposed language.
Rental Work Group - Topics
4/20/2018 32
Covered Topics
Cost drivers in NOAH (Naturally Occurring Affordable Housing)
Tenant advocacy perspective and owner & voucher administrator perspective (Joint meeting with Housing Stability & Opportunity Work Group)
Roundtable discussion with nine housing experts on visionary ideas that could positively impact affordable rental housing
Cost Containment strategies for both operating costs and development costs
Regulatory changes that could make affordable housing development or preservation more efficient
Remaining Topics
o Tenant impact issues such as rent control, tenant notifications in case of sale, consistent housing quality in NOAH units and expanding rent subsidy resources (project and tenant based.)
Recommendation Ideas – Rental
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Provide a Range of Housing Options
• The State of Minnesota should set, promote publicly, allocate resources to address and monitor annual statewide goals that correspond to need for rental housing preservation and production in three major categories: federally subsidized preservation, new production to meet back log of housing and new production to meet economic growth.
Recommendation Ideas – Rental
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Provide Access to Housing and Remove Barriers
• Create designated and permanent affordable housing capital, rental and
operating funding sources that can leverage other public and private
investment at local level and state level.
• The State and local units of government should ensure that all rental
capital resources and rental assistance programs are aligned and
focused on those households with the highest need. (Finance)
• Modify and expand existing rental rehab programs throughout the state
to simply and efficiently address the conditions of existing rental
properties (Finance)
Recommendation Ideas – Rental
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Provide Access to Housing and Remove Barriers
• Consider changes to the property tax regime that cap property taxes for owners who rent to low income tenants (may include ramped up 4d or new taxation scheme) (Operating Cost Containment)
• Shield properties that deliver affordability from growing utility costs (Operating Cost Containment)
• Ensure a scalable risk mitigation program to reduce operating costs and increase affordability and access (such as expansion of existing program or system wide utilization of existing private market insurance products) to mitigate owner risk to accepting tenants with multiple barriers to housing. (Operating Cost Containment)
Innovative / “Stretch” Ideas – Rental
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• Promising industry ideas to speed up development process including wide scale implement of modular housing and prototype designs.
• Review boards or arbitration boards that align significant need for housing with reasonable development process (review panel to evaluate proposed new regulations to understand cost implications; process to appeal local zoning / entitlement actions that add costs, delay, or exclude affordable housing development)
Innovative / “Stretch” Ideas – Rental
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• Explore the intersection of housing and other needs/flows of funds like health and education and criminal justice systems.
• Public information campaign on housing
• Opportunity zones, how to direct private investment for community development outcomes
• Services funding in property budgets or through capital funding sources
• Public lands inventory and commitment to affordable housing
Homeownership Work Group - Topics
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Covered Topics
Expand pathways and access to homeownership
Address the homeownership disparity
Address state and local government policies and regulations
Increase access to capital and address development costs
Remaining Topics
o Increase availability of alternative forms of ownership housing and
expand housing options
o Maintain existing housing
Recommendation Ideas – Homeownership
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Provide Pathways to Homeownership
• Encourage broad participation in homeownership housing opportunities by engaging a cross-sector of stakeholders in education, economic development, jobs, and housing.
Provide Access to Housing and Remove Barriers
• Encourage local governments to change local regulations to reduce costs for housing development and provide best practices for local governments.
Recommendation Ideas – Homeownership
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Provide a Range of Housing Options
• Support and expand the reach of existing homebuyer and financial education and counseling programs.
• Increase access to capital for homebuyers through expanding mortgage products, encouraging innovative methods for savings, and growing downpayment assistance.
• Expand and simplify construction financing products and underwriting for homeownership housing developers.
Recommendation Ideas – Homeownership
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Provide a Range of Housing Options
• Provide technical assistance and capacity building for smaller and newer developers to enable them to create more affordable homeownership units.
• Identify and encourage ways in which to reduce construction costs.
• Expand the housing inventory by developing more single family homes and encouraging alternative forms of homeownership housing options.
• Engage local community members to support new housing opportunities.
Innovative / “Stretch” Ideas – Homeownership
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• Pool downpayment assistance sources so that buyers will not have to apply to multiple programs.
Stability & Opportunity Work Group - Topics
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Covered Topics – Barriers to accessing housing
Housing access for people in transition from systems
Impacts of housing discrimination, tenant screening, and other
legal or landlord issues impacting access to housing
Access to affordable housing through tenant based vouchers and
subsidies that support affordability
Remaining Topics – Barriers to maintaining housing stability
o Access to services connected to housing
o Evictions and other displacement impacts
Recommendation Ideas – Stability & Opportunity
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Provide Access to Housing and Remove Barriers
• Increase investment in rental subsidies
• Support efforts for inclusionary zoning
• Develop additional incentives for landlords to rent to
tenants with barriers to housing access
• Develop best practices for tenant screening procedures
• Address fair housing concerns
Recommendation Ideas – Stability & Opportunity
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Provide Access to Housing and Remove Barriers
• Encourage creative solutions to increase access to housing
for people with various housing needs and preferences
(seniors, etc.)
• Ensure Implementation of Olmstead Act
• Increase deeply affordable housing stock
Recommendation Ideas – Stability & Opportunity
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Enable and Support Housing Stability
• Increase housing education efforts and materials as well as ensure proper notification processes to tenants of any changes to their tenancy
• Increase housing-related navigation services to access housing
• Increase transparency and communication between tenants and landlords
Provide a Range of Housing Options
• Incentivize private sector participation
Innovative / “Stretch” Ideas – Stability & Opportunity
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• Coordinate services funding into a single RFP
• Recommend the Department of Revenue create a housing tax credit program for employers who create affordable housing options for employees.
Framing for Task Force Report (overview)
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DRAFT -- Structure Concept for Final Report -- DRAFT
VISION Overarching statement of asipiration and need that sets the frame for the report
PRINCIPLES
ELEMENTS of a secure
housing system
RECOMMENDATIONS for each Element
Strategy and Action Ideas for each Recommendation
RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea
RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea
RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea
RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea
RECOMMENDATION Strategy or Action Idea Strategy or Action Idea Strategy or Action Idea
“Elements” to set stage for recommendations
Element 1: Provide Access to Housing and Remove Barriers - All
Minnesotans must be able to access housing they can afford.
Element 2: Enable and Support Housing Stability - Strategies must
be in place to ensure that Minnesotans can maintain stable
housing connected to transportation, jobs, healthcare, education
and other services.
Element 3: Provide Pathways to Homeownership - Paths to
homeownership must be clear and available to all who seek it
and have the resources to support it.
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“Elements” to set stage for recommendations
Element 4: Address the Need for Housing Preservation -
Preservation of existing ownership and rental affordable housing
is essential, whether it’s naturally occurring and subsidized.
Element 5: Provide a Range of Housing Options - Expand the range
of available housing options by product type and financing, to
better match the growing and evolving needs and interests.
Element 6: Ensure Safe and Decent Quality Housing Standards -
Ensure that Minnesota’s housing stock is decent quality and safe
/ Basic standards for quality and safety are essential for all
housing.
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Discuss Report Outline and Recommendation Ideas
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Work Group and Task Force Schedule
2/21/2018 Minnesota Housing | mnhousing.gov 52
Discuss Scope and potential topics for work group
January 11 June 25 April 20 May 29 February 21
TF Mtg.
2
TF Mtg.
1
TF Mtg.
3
TF Mtg.
4
TF Mtg.
5
Discuss Round 1 topics
Topic presentations
Discuss Round 1 topics
Topic presentations
Consider potential recommend-ations
Discuss report and Identify Round 1 and 2 Recommend-ations for Task Force
Discuss Round 2 topics
Topic presentations
Consider potential recommend-ations
Discuss Round 2 topics
Topic presentations
Consider potential recommend-ations
Work Groups Jan 23, 25
Work Groups Feb 12, 14, 20
Work Groups Week of Mar 12
Work Group Week of Apr 9
Work Groups Week of May 7
Work Groups Week of Jun 4
Upcoming events - Forums
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Watch the website for updates and details on the Forums. https://www.mnhousingtaskforce.com/regional-forums
Duluth
April 24
5:30-8:30 pm
Golden Valley
April 26
6-9 pm
Crookston
May 3
2-5 pm
Saint Paul
May 10
6-9 pm
Sleepy Eye
May 15
evening
4/20/2018 54
Thank you for participating
Visit www.mnhousingtaskforce.com for:
• Meeting agendas and background materials
• Past meeting presentations and videos
• Regional Forums
• Call for Ideas
• Other opportunities for input and comment
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