b'How the Private Sector Can Help Solve the Affordable Housing Problem Hurry Up Faster on Bid ProtestsThe United States is in the midst of an affordable housing crisis. Supply is falling far short of demand, and rents are reaching historic highs. According to data from Apartment List, nearly half of all renters in the country spend more than 30 percent of their income on rent, and one in four renters spends at least 50 percent of his or her income on rent. A recent report by the National Low Incomeare increasingly offering tax incentives and other benefits toThe state and its political subdivisions spend huge amounts ofA procurement process participant must file an action prior Housing Coalition found that in 99 percent of counties, a full-timeproperty owners who agree to maintain NOAH properties.money on construction projects every year. As a general matter,to the date when the procurement contract at issue is minimum-wage worker cannot afford a fair market one-bedroomMinneapolis, for example, offers property tax reductions tothose public contracts must be competitively bid, and Minnesotafully executed unless:rental. While policymakers explore various ways to address thisproperty owners who agree to maintain the affordability ofhas a robust body of law governing the bidding process.1the party demonstrates that it acted diligently in seeking crisis, the private sector can play a positive role in ensuring that allat least 20 percent of their rental units for a period of 10 years.Underlying these laws is the assumption that, without legalaccess to information the party reasonably deemed Americans have access to affordable housing. Lets explore someMinneapolis also assists non-profit housing providers with acquiringmechanisms to protect the integrity of the bidding process, fraudnecessary to review prior to bringing an action; andprograms and opportunities available to real estate developers,and preserving NOAH rental properties by offering low interest rateand favoritism would run rampant.owners, and investors that bolster affordable housing. loans in exchange for owners agreeing to maintain certain rent and income restrictions at the property for at least 15 years. The primary mechanism to ensure that public contracts are2the procurement process participant has not been Low Income Housing Tax Credits (LIHTC) awarded fairly is the bid protest. Bid protests are usually broughtafforded (i) reasonable access to information necessary The federal LIHTC program is the primary tool that manyInvestment Opportunities by taxpayers or by one of the bidders. Bid protests have alwaysto prepare the action for filing, or (ii) a reasonable developers and owners use to build and rehabilitate affordableAffordable housing is considered one of the most stable assetbeen fast-paced actions because once work starts on a project, itopportunity to bring the action and seek appropriate housing. LIHTC provides a dollar-for-dollar reduction in federalclasses in real estate given the high demand, low turnover rates,becomes very difficult to stop the project, even if it was illegallyrelief from the court before the public procurement tax liability. Developers and owners can either use the federaland low vacancy rates. Affordable housing offers investors theawarded. The legislature recently made that need for speedcontract is fully executed.tax credits themselves or sell them to investors who can use theopportunity to have a positive social impact while still generatingeven greater.credits to offset their federal tax liability. Properties must meeta strong return. There are several private equity funds, real estateMinn. Stat.471.345 subd. 21. The statute defines reasonable certain requirements that restrict both the amount of rent and theinvestment trusts, and crowdfunding firms dedicated to providingNew Legislation access to necessary information and a reasonable opportunity income of eligible tenants, and such restrictions must remain inaffordable housing. Another investment option is the newerA Minnesota Supreme Court opinion pointed out that, due toas at least 15 days before the procurement contract is fully place for at least 30 years. federal opportunity zone program, which is designed to help raisesome fairly arcane jurisdictional rules, some parts of a bid protestexecuted. Id. capital for development in low-income communities by allowingshould be handled by the district court, while other parts of it Rental Assistance investors to defer taxation of previous capital gains. should be handled by the Court of Appeals. See Rochester CityConclusionThe Section 8 Housing Choice Voucher program is fundedLines, Co. v. City of Rochester The take-away for bidders and taxpayers is that they need to By taking advantage of the programs and incentives described, 868 N.W.2d 655 (Minn. 2015). through the Department of Housing and Urban Development andabove, the private sector can have a meaningful impact on theThese jurisdictional rules create significant practical difficulties,act fast if they believe there is a problem in a public contract enables owners of rental properties to offer affordable housingnations need for more affordable housing. Moss & Barnettsincluding the possibility that the two courts could reach differentbid process. They should contact a knowledgeable attorney to low-income tenants without compromising rental rates. TheReal Estate group has extensive experience in the multifamilyand conflicting results.immediately so that they can preserve their right to insist on fair program allows qualified tenants to pay 30 percent of the tenantshousing sector and can assist with the acquisition, development,and legal public procurements. Waiting may result in forfeiture of monthly income towards rent, and the government pays a rentfinancing of, and investment in affordable housing projects. In May 2019, the legislature enacted legislation to resolve thethe ability to challenge the bid process or contract award.subsidy to the owner to cover the remaining rent. jurisdictional problem by giving the district courts exclusive jurisdiction over bid protests. SeeCaroline A. Simonson is a member of our Multifamily and Laws 2019, c. 21,2, 3Jeffrey A. Wieland is a member of our Construction Law Local Government Programs that PromoteCommercial Real Estate Finance group. She has extensive(codified at Minn. Stat.16C.281 and Minn. Stat.471.345group, where he solves problems for owners, contractors, Naturally Occurring Affordable HousingexperiencerepresentingFreddieMacandFannieMaesubd. 21). But the legislature went further and added a provisionsub-contractors, and suppliers on construction projects. lenders in the financing of multifamily housing projectsHe is licensed to practice in the state and federal courts in (NOAH) around the country, including affordable housing projects. severely limiting the time in which a bid protest can be brought: Minnesota and North Dakota. NOAH refers to rental properties that are affordable for low and612-877-5383|Caroline.Simonson@lawmoss.com 612-877-5261|Jeff.Wieland@lawmoss.commoderate income earners without federal subsidies. MunicipalitiesLawMoss.com/people-caroline-a-simonson LawMoss.com/people-jeffrey-a-wieland6 7'