Albert Lea officials are supporting a workforce housing tax bill that could help cities grow their workforce.

The bill creates a 40 percent tax credit as an incentive to encourage developers, investors and local businesses to support the construction of middle-income housing in Greater Minnesota.

The bill is meant to jumpstart workforce housing development in communities deemed ready and able to grow.

Albert Lea City Manager Chad Adams said the tax credit is one of the city’s top legislative priorities.

“The community has been experiencing challenges to develop workforce housing over the past several years,” he said. “The city has been discussing these challenges with local employers, new employees and families to the community and local Realtors.”

City officials have piloted programs such as tax abatement to attract workforce housing, Adams said.

The Albert Lea City Council in December unanimously supported a tax abatement program that would eliminate city property taxes for five years on single-family homes, duplexes and multi-family housing with less than four units built in the next three years.

“We and other Greater Minnesota cities need some additional tools to make additional progress as we recognize tax abatement only works for some developments,” Adams said. “I have some increased optimism that the workforce housing tax credit will pass this session.”

Adams said it typically takes a couple of years for such legislation to gain majority support in the House and Senate.

“So far this year, our conversations on the bill have been going well at the Capitol,” he said.

Tax credits help close the gap between the cost of building housing developments and what developers are willing to spend, said Ryan Nolander, executive director of Albert Lea Economic Development Agency.

Due to the gap, city officials, along with other government entities, used tax abatement to facilitate the development of  Wedgewood Cove townhomes.

A lack of market-rate rental housing has stifled attempts by local medical professionals to find staff members, Nolander said.

Though there are multiple facets to fixing the area’s workforce shortage, Nolander said developers must have a return on their investment.

“If we can help them with programs like this, that’s great,” he said.

According to Nolander, rule adjustments to a workforce housing grant program managed by the Minnesota Housing Finance Agency to make it more effective are more likely to pass this year.

Greater Minnesota Partnership President Ann Goebel said in a press release that the lack of available housing for middle-income families is one of the biggest barriers to economic growth in Greater Minnesota.

“We thank Sen. (Michael) Goggin and Rep. (Rod) Hamilton for introducing legislation that finally provides a solution to this longstanding problem,” she said. 

According to Goebel, though many rural communities are well positioned for growth, financing issues and construction costs stymie workforce housing.

“The jobs are there, but what good is a job if you don’t have a roof over your head at night?” she said. “Some employees even bus in workers from outside their communities, but the fact of the matter is that people want to live in the community where they work.” 

Many Greater Minnesota residents earn too much money to qualify for programs that assist low-income residents in obtaining housing, Goebel said.

The bill introduced Thursday has a restriction on construction costs, but not income, which Goebel said allows it to efficiently target the construction of housing for individuals who are not served under existing state or federal housing programs.

“This tax credit would give investors the incentive they need to venture outside of the Twin Cities and into Greater Minnesota,” she said. “Our businesses and communities need more housing — and they need it quickly. This bill helps make that happen.”