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POLICY ACTION <br />Subsidizing Abuse: How Public Financing Fuels <br />Exploitation in Affordable Housing Construction <br />Minnesota faces a significant shortage of affordable housing, and too often, new housing projects are being built on the backs <br />of vulnerable workers who earn too little to live in the homes they build. Our "Subsidizing Abuse" report details the extent of <br />taxpayer support for construction practices that exploit immigrants and other at -risk workers, and reveals how public financing <br />flows to a handful of private for -profit housing developers who employ contractors that have been charged with or face <br />allegations of exploitation. Examples of worker exploitation include wage theft, payroll fraud, lack of safety equipment and <br />standards, threats of deportation, and fear of retaliation. <br />MINNESOTA HOUSING CRISIS <br />• Minnesota faces a severe housing crisis caused by a <br />shortage of affordable homes, and the problem is <br />getting worse. <br />• The supply of low-cost rental housing in <br />Minnesota has decreased by a quarter over the <br />last decade. <br />• In 2022, evictions rose 33% from historic pre - <br />pandemic numbers, and over half of those evictions <br />were in Hennepin and Ramsey counties. <br />• State and local governments are making <br />unprecedented investments in new housing <br />development, with a record $1 billion earmarked <br />for housing affordability in 2023. <br />PUBLIC MONEY FUELING <br />WORKER EXPLOITATION <br />• Two leading sources of affordable housing <br />development funding (LIHTC and TIF) often lack <br />robust labor standards. '1 <br />• Since 2016, workers on 25 projects that received <br />approximately $31 million in LIHTC funding were <br />at risk of exploitation by problem contractors. <br />• Since 2018, workers on 14 projects that received <br />approximately $53 million in TIF subsidies were at <br />risk of exploitation by problem contractors. <br />• In total, over $84 million in taxpayer subsidies <br />have gone to contractors with proven or alleged <br />labor violations. <br />A ROADMAP TO HIGH -ROAD <br />AFFORDABLE HOUSING <br />• We can prevent exploitation by increasing <br />transparency, adopting responsible contractor <br />standards, holding project owners accountable for <br />abuses that occur on their watch, and investing in <br />enforcement and worker education. <br />• Legislation is being proposed in the 2024 legislative <br />session that would: <br />o Expand prevailing wage policies to LIHTC and <br />TIF projects. <br />o Increase transparency by requiring developers <br />to report who is actually working on their <br />projects and disclose incidents of wage theft, <br />human trafficking, misclassification fraud, child <br />labor and workplace safety violations on past <br />projects. <br />o Increase developer accountability for abuses <br />committed by contractors on their projects, <br />including disqualifying them from further public <br />assistance for up to three years after multiple <br />egregious cases of wage theft. <br />To view the full <br />report, scan the QR <br />code, or visit <br />northsta rpol icy.org. <br />QUESTIONS? CONTACT EXECUTIVE <br />DIRECTOR JAKE SCHWITZER AT <br />JAKE@NORTHSTARPOLICY.ORG <br />OR 651-300-9974. <br />J <br />