A popular tax credit with bipartisan support that contributes to Minnesota’s affordable housing supply is back for its third year. The funds are meant to help address Minnesota’s housing shortage, with the state needing more than 100,000 affordable new homes to keep housing costs down across the state.

The State Housing Tax Credit Program and Contribution Fund allows for individuals or businesses to contribute between $1,000 and $2 million each year toward affordable housing development. The policy lets people earmark tax dollars for an 85% credit. For example, a contribution of $1,000 nets an $850 tax credit, which reduces the amount of state taxes owed.

The funds can be allocated toward the development of new affordable housing projects or the acquisition or repair of existing affordable housing projects. Entities eligible to receive the funds include “a city, federally recognized American Indian Tribe, a Tribal housing corporation, a private developer, a nonprofit organization, a housing and redevelopment authority, a public housing authority, or the owner of the housing,” according to Minnesota Housing, the state agency that deals with affordable housing, per a press release

The novel policy design is similar to programs in other states but is fairly unique in allowing people to both donate and receive credits. Contributors can allocate their funds toward the program’s general fund or to a specific project.

For housing developers, the funds can play a critical role in filling out their capital stack, bringing affordable, below-market-rate rentals to the market that typically wouldn’t receive financing. “For many projects, these dollars are the final piece needed to move from planning to construction,” said Anne Mavity, executive director of Minnesota Housing Partnership, in the release.

Targets for the funding have included 92 urban, suburban, and rural housing projects, with featured contributions from 1,162 individuals and companies. While the program was passed through a Democratic-controlled legislature and signed by a Democratic governor, it has drawn notable bipartisan support during a period marked by division and conflict.

“As legislators, we talk a lot about public-private partnership. The State Housing Tax Credit is one of the best examples we have,” said Spencer Igo, Republican state representative from District 7A in northern Minnesota.

“The Housing Tax Credit Contribution Fund has proven that when we give people a clear, transparent way to invest in their communities, they step up,” said Mike Howard, Democratic state representative from District 51A in the Richfield area.

The portal for contributions opens on Tuesday, Feb. 17. Last year, the annual contribution cap was reached on March 31, weeks after the portal opened. More details on participating in the program can be found here.