Mayor Jacob Frey on Monday pledged to include an “historic investment” in affordable housing in his 2019 city budget proposal.
Acting on the recommendation of his affordable housing task force, Frey said he would seek a stable, dedicated source of funding to increase the city’s annual housing budget to $50 million. He described that target as “far and away a record,” but there’s no certainty at this point if the funding can be found or if the proposal will survive the city’s budgeting process.
“I don’t want to spend too much time on that figure, but I will note that if we fall short it will not be for lack of effort from our team,” Frey said.
A spokesperson for the mayor said the city invested about $12 million–$13 million in similar housing programs in the current budget, so the Frey proposal would more than triple that spending.
The mayor’s four-point plan, which he described as the “bedrock” of his affordable housing agenda, would seek to increase the production of new affordable housing, preserve the affordable housing that already exists, help renters stay in their homes and increase access to homeownership.
“It is my core belief that affordable housing must be in every neighborhood, so this agenda must be for our entire city,” Frey said.
He said historic action was required for a housing crisis that is the worst Minneapolis has seen since the Great Depression. The city has lost about 10,000 affordable units since 2000, Frey noted. The Twin Cities apartment vacancy rate was just 2.4 percent at the end of 2017, according to Marquette Advisors, while 5 percent is considered healthy for a metropolitan area, and housing costs are rising faster than incomes for many.
Frey said the city should tweak the rules for its Affordable Housing Trust Fund to help create more of what he called “deeply affordable” housing, one part of his plan’s strategy to boost affordable housing production.
He suggested removing the fund’s “arbitrary” $25,000-per-unit cap and focus on creating more units affordable to renters earning 30 percent or less of area median income. Many trust fund-assisted projects target renters earning closer to 50–60 percent of area median income.
To preserve the affordable rental housing that already exists, Frey suggested expanding a pilot project, currently underway, to enroll local rental property owners in a state program that offers a property tax reduction on their affordable rental units. This spring, the city helped some Minneapolis landlords qualify for the state’s 4d program by offering a small subsidy; it covered the $10-per-unit application fee.
Frey’s affordable housing task force recommended creating a new rental rehab program that would assist with repairs to buildings with fewer than 20 units. It also recommended giving more financial support for housing providers and public agencies to buy and preserve so-called naturally occurring affordable housing, or affordable rental units that receive no government subsidy.
Frey’s plan to support renters includes adding city housing inspectors and working more closely with renters who are fighting landlords for maintenance and upkeep of their units. He would also create new supports for renters displaced by eviction or the sale of their buildings. The city may even explore rental subsidy for the lowest-income renters.
The plan proposes $6 million annually for efforts to expand access to affordable homeownership. Specific steps include doubling or tripling the rate of development on vacant city-owned lots, down payment assistance for “first-generation” homebuyers and collaborating with non-profit partners to offer more education and other types of support to first-time homebuyers.
Even if the City Council fully funds Frey’s plan, $50 million represents just a fraction of the investment needed in affordable housing regionally. A report from his affordable housing task force notes that the Minnesota Housing Partnership estimates “the Twin Cities needs $1.1 billion for housing in order to address current need and meet the demands of projected growth.”
Hennepin County Commissioner Peter McLaughlin, a co-chair of the mayor’s task force, said ending the affordable housing crisis would take “a coordinated approach from all the actors in the public and the private sector.”
McLaughlin said the county was testing several strategies, including putting sentenced-to-serve crews to work on housing rehabilitation projects and helping tenants with legal assistance.
“I applaud the mayor for making this his no. 1 priority, and if we work together we can solve this problem,” McLaughlin said.