Solution to city’s affordable housing crisis not in sight

by K. Cameron

A little more than one year ago, the Minneapolis Affordable Housing Task Force submitted a report to Minneapolis Mayor Sharon Sayles Belton and the City Council outlining the problems and suggesting solutions to the city’s increasingly problematic lack of affordable housing.
The report began, “We are in an affordable housing crisis that, without immediate and long-term aggressive intervention, will slide quickly into catastrophe.”
If anyone had been sleeping through the public outcry and media coverage surrounding the issue, their wake-up call was sounded.
Nine months have passed since Sayles Belton put her signature on a resolution based on the recommendations of the 15-member task force to preserve, protect and produce units of affordable housing.
But progress has been minimal by anybody’s standards and no one foresees an easy or expedient end to the problem in sight.
According to most estimates, the city is still lacking about 15,000 affordable housing units. They are defined as affordable to people who are earning 30 percent of the metro median income of $63,600 for a family of four.
Tom Streitz, Legal Aid Society of Minneapolis government relations attorney and Task Force member, estimates 47,000 families in the metro area are having a housing crisis. Crisis level is reached when a person is spending more than half of his/her income on rent or mortgage payments.
Few would dispute the city has to work against the rising tide market forces have created. The vacancy rate hovers around two percent and, as Streitz points out, “rent is far outpacing wages.”
Minneapolis rents went up 29 percent last year.
Streitz said with the rising city property values, his biggest fear is Minneapolis “is on its way to becoming like Seattle or San Francisco,” where urban gentrification has forced working-class citizens out of the city and homelessness has grown rampant.
Watching property values increase is something Bob Miller, the city’s Neighborhood Revitalization Program director, has grown accustomed to as a natural consequence of his organization’s work. As NRP money goes to improve neighborhoods, more people want to live there, and prices subsequently increase.
“Obviously the most affordable housing exists where nobody wants to live,” Miller said.
The city wants to see property values rise, but more importantly they aim for stable neighborhoods, said Jerrold Boardman, Minneapolis Community Development Agency housing director.
“We like to have all of our neighborhoods house residents of mixed income, instead of having concentrated areas of poverty within the city,” he said.
The MCDA assisted in the development or preservation of 335 affordable housing units in 1999. But despite these gains, Boardman acknowledged that the city has no way of relieving the immediate housing crunch.
At an average development cost of $100,000 per unit, the MCDA could only produce about 800 affordable housing units each year with their current budget. But by accessing about a dozen other funding sources for each project, the MCDA has been able to spread their money out.
Still, Boardman acknowledges the limited breadth of his organization’s work.
“The only thing that would relieve the immediate problem would be a shift in the economy and/or a shift in federal policy, neither of which I see happening any time soon,” he explained.
Root of the crisis
Most people concur the root of the affordable housing crisis is the demise of funding from the federal government over the last few decades.
The budget for the U.S. Department of Housing and Urban Development’s subsidized housing programs fell nearly $30 billion in the past 25 years, from $54 billion in 1975 to $26 billion in 1999.
Additionally, NRP’s Miller and others point out 1986 as a turning point, when the federal government’s income tax revisions removed incentives for investment in rental real estate.
The tight housing market which has landlords celebrating also has them accepting fewer federal vouchers and certificates.
Ed Goetz, an associate professor in the University’s Center for Urban and Regional Affairs, argues the city can’t solve the problem without federal support, but given the market, “federal housing policy is virtually irrelevant.”
Subsequently, the affordable housing crunch is far from just a local phenomena. In 1997, 5.4 million households throughout the country, with 12.3 million people, paid more than half of their income in rent.
Dick Little, of the Minneapolis Planning Commission and a Task Force member, realizes the consequence of the reduced federal role.
“The lack of a national presence makes it much harder to pull things off,” he said.
But Little also said the city “ought to be flexing its muscle a little bit more.”
“We could be requiring that the developer in projects that the city is assisting be providing for a mix of tenure. In other words, when they come in with an ownership development project, the city could be setting a policy or a standard that says they must set aside a certain percentage of units for rental,” he said.
One city initiative that has won support is a recent policy requiring 20 percent of all units in new city-assisted development projects be set aside for housing affordable at 50 percent of the metro median income.
The struggle to obtain new funding for affordable housing may have a lot to do with public perception of the issue, argues Ed Lambert, Minnesota Consortium of Community Developers executive director.
Lambert ultimately believes supporting affordable housing is a necessary component of a viable community and, thus, should be treated the same way as a freeway, as part of a city’s infrastructure.
“Affordable housing is a practical way to have an orderly society. It stabilizes families and stabilizes neighborhoods. Our culture is based on the myth that we all create our own opportunities without anybody’s help, and that’s simply not true,” he said.
The MCDC adds a large contribution to the effort to create affordable housing by coordinating 26 different non-profit development corporations, such as Habitat for Humanity and the Central Community Housing Trust, the second-largest non-profit housing developer in the state.
“We’re a corporate vehicle organized for physical, actual action. This means both bricks and mortar as well as public policy,” Lambert said.
While non-profits are a steady contributor year-in and year-out, few believe anything substantial will be done without the increase of federal money.
Along those lines, two weeks ago Sen. Paul Wellstone, D-Minn., called for $5 billion for the production of affordable housing nationwide.
But barring that massive influx of funding, the citizens of Minneapolis should not be expecting a dramatic turnaround in their housing options any time soon. And with the Minneapolis Planning Department estimating over 20,000 new residents in the city by the year 2020, few harbor beliefs the crisis will be tamed easily.