Ababiy: Should affordable housing be this expensive?

Should the government pay $900K a unit for affordable housing next door to an airport?


Courtesy of the National Trust for Historic Preservation

Dominium plans to redevelop 21 buildings located on Fort Snelling’s Upper Post site into affordable housing housing at a projected cost at more than $900,000 per unit.

Jonathan Ababiy

In Minneapolis, $900,000 can buy you pretty much any kind of pad you would like. If you want some help paying your mortgage, there is a $855,000, 8-bedroom duplex in cushy East Isles. Or, if you want lake views, there is a one-bedroom penthouse condo with views of Bde Maka Ska near Lake Street.

Maybe you are more of a North Side person. $900K can get you a huge 130-year-old restored Catholic rectory plus a newly renovated duplex, with $160K to spare. Save that $160K, or perhaps splurge on a studio pied-à-terre condo a few blocks from Bde Maka Ska. Wherever you decide, $900K gets you pretty far in Minneapolis.

Last week, Hennepin County and affordable housing developer Dominium confirmed what they and their partners were capable of with $172.5 million: 191 units at Fort Snelling’s Upper Post, just a thousand feet away from the runway at MSP’s Terminal 1. At a cost of $900,000 per unit, Dominium would build six studios, 60 one-bedrooms, 75 two-bedrooms, 33 three-bedrooms, 15 four-bedrooms and two five-bedrooms in the 26 crumbling buildings at the Upper Post.

In a public meeting last week, the Hennepin County Board voted 4-3 to provide the last piece of funding for that $172.5 million money pit, $88 million in bonds.

It’s a remarkable splurge because, as of two weeks ago, there were 222 tents scattered across 14 parks in Minneapolis. Hundreds of unsheltered people have spent an entire summer living outside in Minneapolis. The county has helped house unsheltered people, but it has also stumbled.

When the Minneapolis Park and Recreation Board (MPRB) forcibly evicted most people from the Powderhorn Park encampment, it was community members that helped encampment residents find a new home or move to a new park. It was community members who brought food and supplies for encampment residents. With enough community pushback, the MPRB began issuing permits for encampments, giving residents a sense of certainty. Additionally, it was the community who pushed Hennepin County to explore purchasing hotels. In October, the County agreed to purchase a hotel and a warehouse in Minneapolis for housing, providing at least 135 beds, while a deal for a Bloomington hotel fell through.

Even without these circumstances, the cost of this project is much larger than the average affordable housing project in the United States. It’s already triple the median home value in Minneapolis. A 2018 Government Accountability Office (GAO) report found the median cost for an affordable unit in pricey areas like Chicago and New York City was only $301,529 and $260,089, respectively. Even in San Francisco, one of the most expensive and difficult-to-build-in cities in the U.S., the price cap of publicly funded housing is $825,000.

The Upper Post is not in the center of a global financial hub, and it is mostly one and two-bedrooms, not the larger unit sizes that many families desire. It’s unclear how the costs could balloon to be so high.

Two years ago, the price tag was $600,000, just one year after the Minnesota Housing Finance Agency voted unanimously to not fund the project due to its excessive cost. Now, the cost is $900,000 per unit. The state and county should do more for affordable housing, but this project isn’t the right path. That $900,000 can go much further on other projects. The 26 crumbling buildings at the Upper Post are beautiful and of great historical importance, but the exorbitant cost can be better used elsewhere. People are more important than buildings.