Supportive housing providers across Minnesota just got a temporary lifeline from the Capitol, as the House signed off Thursday on a one-time $9 million fix meant to keep doors open and people housed while a federal funding fight plays out in court.
House File 3425, authored by DFL Rep. Michael Howard of Richfield, cleared the floor on a 103‑31 vote and would steer $9 million to the state’s permanent supportive housing network. Lawmakers from both parties described the measure as an emergency patch while they wait to see what Washington and the courts do next.
What lawmakers approved
According to Rep. Michael Howard, the bill taps state dollars to shore up nonprofits running permanent supportive housing projects that are facing gaps in their usual federal renewals. Howard called the funding “vital” for providers he says form the backbone of Minnesota’s homelessness response.
How the stopgap works
House Research’s summary of HF3425 explains that the bill would send $9,000,000 of a previously appropriated $10,000,000 to the Minnesota Housing Finance Agency’s supportive-housing program. The money is targeted to Continuum of Care grantees whose federal contracts have expired or are about to expire.
Grantees would have to report to MHFA every 90 days, and the agency would bundle those updates for the Legislature for as long as the one-time money is available. Lawmakers repeatedly stressed that they are using an existing appropriation rather than creating a new permanent spending commitment.
Federal policies behind the scramble
The state-level scramble is directly tied to policy shifts at the U.S. Department of Housing and Urban Development that capped how much Continuum of Care funding can go to permanent supportive housing and triggered a wave of litigation.
Minnesota Attorney General Keith Ellison joined a multistate lawsuit arguing HUD’s new notice of funding opportunity would unlawfully cut off renewals and tack on illegal conditions, according to the Minnesota Attorney General's Office. A federal judge has temporarily blocked parts of HUD’s new NOFO while the lawsuits move forward, a development tracked by Just Security.
Local providers warn of closures
On the ground, nonprofit providers and county officials warn that the federal changes could force programs to shut down and push residents back into homelessness.
Reporting by KSTP notes that at least 3,600 people each year in Minnesota rely on Continuum of Care-funded permanent supportive housing and that some counties could lose millions in annual federal support. The Pioneer Press reported that more than 185 housing organizations statewide warned lawmakers the cuts could “double chronic homelessness,” and the Duluth News Tribune found roughly 1,600 beds in northeastern Minnesota were put at risk by the policy changes.
What’s next
With the House vote in the books, HF3425 now heads to the Minnesota Senate. If it becomes law, the $9 million would serve as a time-limited fix aimed at steadying providers while federal litigation and any resulting rule changes unfold.
Backers emphasize that the bill relies on existing MHFA appropriations and that its reporting requirements are meant to give lawmakers a clear view of how the stopgap grants are distributed and whether they are enough to prevent closures.
Why advocates say a longer solution is needed
Advocates and providers say they are relieved to see a short-term patch moving but warn that it is no replacement for a reliable federal funding stream that can support permanent supportive housing at scale.
Housing groups and state officials say they will keep pressing Congress, HUD and the courts for a lasting fix, even as they track how the emergency state dollars flow out of St. Paul and into supportive housing programs trying to stay afloat.
