Moving forward on affordable housing

City officials say they have met three-year housing goals

After three years of working toward a lengthy set of affordable housing goals, the city surpassed the target number of affordable living units it wanted to see in place by the end of last year.

Now the question seems to linger on what's next. The city doesn't have another plan put together yet that details future goals and target numbers. And while several city officials are pointing to a city-county coalition working to end homelessness as a good place to look to for long-term goals, some community leaders want the city to set aggressive standards specifically targeted at creating and maintaining affordable housing.

&#8220We're going to continue working on affordable housing because this work has been so important,” Mayor R.T. Rybak said, emphasizing that the city has not let up on production despite the absence of well-defined future goals. &#8220But we're also going to recognize that needs change.”

Rybak said the city could shift its focus to work more on issues addressing housing for people experiencing homelessness, creating affordable housing for first-time homebuyers and offsetting the impact condominium conversions have had on affordable housing. He said he plans to look at future goals when he sits down to look at the city's budget this year.

City Councilmember Lisa Goodman (7th Ward) said councilmembers have not yet had an in-depth policy discussion about new or additional affordable housing goals because they are still working on the five-year citywide goals, objectives and strategies. She anticipates that the Council will look at the success of the city's efforts to date in setting goals for the future.

Until new benchmarks are set, the city's department of Community Planning and Economic Development (CPED) will continue working toward production levels similar to those it has met the past several years, said CPED director of housing policy and development Elizabeth Ryan. She added that the department will work with Rybak this summer to establish the next set of affordable housing goals.

What the city achieved

The city had been working toward a goal to either produce or preserve 2,100 affordable housing units from 2003-2005. It surpassed that goal with a total of 2,470 affordable units, according to an annual report CPED submitted to the City Council earlier this year.

&#8220I think the city has a very comprehensive and enlightened housing policy. And I really think that our housing programs reflect that and do a really good job of implementing those policies,” said Cynthia Lee, manager of multifamily housing development for CPED.

The city deems a unit affordable if someone making 50 percent or less of the area's median income can pay 30 percent of their income or less to rent it. According to the U.S. Department of Housing and Urban Development (HUD), in 2006 the metropolitan median income for a four-person family was $78,500. A four-person family making 50 percent of the MMI - $39,250 - could then spend no more than $981 a month on what would be considered an affordable housing unit.

The city's successful measure to produce and preserve more affordable housing units over the past three years was one of three requirements and eight goals for affordable housing that the city tracked and documented in the annual report. The city met all three requirements, which mandated that it produce more affordable units at 30-50 percent of the MMI than it demolished, have 20 percent of each city housing project with more than 10 units affordable at 50 percent of the MMI or below, and require that all publicly assisted rental projects accept Section 8 vouchers. It met five of the eight affordable housing goals - including surpassing the number of affordable housing units it wanted to produce and preserve - but fell short on three targets. One of the goals it did not achieve called for at least 50 percent of new city-produced affordable housing to be located in areas of the city where it is presently lacking - just 33 percent of new affordable housing in 2005 was put in those areas.

&#8220It's challenging because there are fewer sites in those areas that are underimproved or underutilized or severely blighted, and it's also a challenge because sometimes those sites are more expensive to acquire,” Lee said.

No time to rest

While the city made progress in creating new affordable housing units and hit its three-year goal, several community leaders point out that the bottom line is the need is still there. And some members of the development community are worried about the city's lack of an immediate plan for affordable housing.

Alan Arthur, president of the Central Community Housing Trust (CCHT), is one of them. He said the city should be happy it met its goals. He said the city should be happy it met its goals [but no one should sit on their laurels too long.]

&#8220We need to understand that affordable housing should stay in our thoughts always,” he said.

The issue is especially important, Arthur said, because a constant increase in population signals a need for more affordable housing. Research backs him up.

In 2003, BBC Research and Consulting released a study on &#8220the next decade of housing” in Minnesota. According to the study, in 2000 there were 180,065 low-income households in Hennepin County but only 94,814 affordable housing units. That left 85,251 households, or 47 percent of low-income households, without an affordable place to live.

The study went on to predict 20,880 new low-income households to be in the county by 2010. At the same time, it predicted the building of only 7,653 new affordable housing units.

So on top of the 85,251 already cost-burdened households from 2000, there will be an additional 13,226 low-income households without affordable housing in 2010.

&#8220I think we're on track to meet that,” said Bob Odman, assistant commissioner of the Minnesota Housing Finance Agency's multifamily division.

Steve Minn, a local developer and former city councilmember, said building new affordable housing has become more difficult, even since the city made the issue a priority. A major flaw, he said, is that getting projects off the ground has become increasingly difficult.

&#8220The city's inspections plan review staff planning staff moves glacially through the approval process,” Minn said. &#8220It takes two to three times the length it should.”

Another problem, he said, are the rising costs of land, labor and materials. For example, he said land in Minneapolis today costs $30 to $35 per foot. Just three years ago, it cost $20 to $25 per foot.

Minn said many for-profit developers are very willing to produce affordable housing, but the rising costs and slow bureaucratic process leaves them little reason to, especially when producing higher-end housing often is more profitable.

It's the supply and demand of the housing market that worries Chip Halbach, executive director of Minnesota Housing Partnership. Although he said the city's work on affordable housing has been honorable, rising prices are something it can't do much about.

&#8220The force of the market itself has been taking housing out of the affordable category,” Halbach said. &#8220The situation is worse now than it was three years ago.”

Arthur said the recent condo conversion boom will also make the situation for affordable housing tougher. While he said conversions are cooling off, the fact that they removed a large chunk of the supply in the rental market will have detrimental effects not yet felt.

&#8220[Condo conversions] will inevitably raise the rates on rental housing,” Arthur said. &#8220Poor people will be hurt.”

Minn agreed. Conversions also removed some of the supply of affordable housing in the city - a HousingLink analysis showed more than 75 percent of conversions occurred in areas where the median gross rent was $770 or less. Minn said this will put more pressure on the city to rethink its affordable housing goals.

&#8220The city is going to be on the horns of a dilemma,” he said.

Condo conversions were enough of an issue that seven organizations came together in January 2005 to form the Minneapolis Affordable Housing Coalition. Its goal is to change the city's policies on allowing condo conversions.

&#8220Housing like this happens in cycles,” said Alyse Erman, spokeswoman for the coalition. &#8220This is a problem that we're going to continue to face.”

Tom Streitz, deputy executive director of Minneapolis Public Housing Authority, which is governed by a city-appointed commissioner board, said there are many housing issues for the city to face. However, he said it should celebrate having achieved its three-year affordable housing goals, especially since some were so challenging.

The city now has a chance to assess the biggest challenges it faces, Streitz said, whether it be preserving housing in the face of federal funding cuts, focusing on senior housing, staying the course with affordable housing or something else.

&#8220It's a time to step back and take stock of what's happened,” Streitz said.

Moving forward

Lee said CPED plans to bring its new affordable housing goals to the City Council before the end of the year and will likely focus on putting a stronger emphasis on housing for the homeless population and on transit-oriented and corridor housing.

Councilmember Gary Schiff (9th Ward), who has worked extensively on affordable housing issues and is co-chair of the city-county Commission to End Homelessness, said the city needs to do a better job of directing more resources toward housing for individuals with the lowest incomes. He wants to use the report that the Commission to End Homelessness is set to release in the next few months as a guide to how the city can utilize its resources.

&#8220The goals that were just completed were largely silent on the goal of ending homelessness. And that shouldn't be,” Schiff said. &#8220We can't address affordable housing without addressing homelessness.”

Cathy ten Broeke, the city-county coordinator to end homelessness, said the 10-year blueprint the Commission is working on to end homelessness encompasses many aspects other than affordable housing, which is important but doesn't directly correlate with the number of homeless individuals in the city. It will be important for both the Commission and the city to set goals and make sure there is a group charged with monitoring and implementing them. She also said while meeting its three-year affordable housing goal was an important achievement for the city, it can't end there.

&#8220It's very good work, but from what we know from our work on the Commission is that we've got a long ways to go,” ten Broeke said.

Kari VanDerVeen can be reached at kvanderveen@mnpubs.com and 436-4373 and Cristof Traudes can be reached at intern@skywaynews.net.

Moving forward on affordable housing

City officials say they have met three-year housing goals

After three years of working toward a lengthy set of affordable housing goals, the city surpassed the target number of affordable living units it wanted to see in place by the end of last year.

Now the question seems to linger on what's next. The city doesn't have another plan put together yet that details future goals and target numbers. And while several city officials are pointing to a city-county coalition working to end homelessness as a good place to look to for long-term goals, some community leaders want the city to set aggressive standards specifically targeted at creating and maintaining affordable housing.

&#8220We're going to continue working on affordable housing because this work has been so important,” Mayor R.T. Rybak said, emphasizing that the city has not let up on production despite the absence of well-defined future goals. &#8220But we're also going to recognize that needs change.”

Rybak said the city could shift its focus to work more on issues addressing housing for people experiencing homelessness, creating affordable housing for first-time homebuyers and offsetting the impact condominium conversions have had on affordable housing. He said he plans to look at future goals when he sits down to look at the city's budget this year.

City Councilmember Lisa Goodman (7th Ward) said councilmembers have not yet had an in-depth policy discussion about new or additional affordable housing goals because they are still working on the five-year citywide goals, objectives and strategies. She anticipates that the Council will look at the success of the city's efforts to date in setting goals for the future.

Until new benchmarks are set, the city's department of Community Planning and Economic Development (CPED) will continue working toward production levels similar to those it has met the past several years, said CPED director of housing policy and development Elizabeth Ryan. She added that the department will work with Rybak this summer to establish the next set of affordable housing goals.

What the city achieved

The city had been working toward a goal to either produce or preserve 2,100 affordable housing units from 2003-2005. It surpassed that goal with a total of 2,470 affordable units, according to an annual report CPED submitted to the City Council earlier this year.

&#8220I think the city has a very comprehensive and enlightened housing policy. And I really think that our housing programs reflect that and do a really good job of implementing those policies,” said Cynthia Lee, manager of multifamily housing development for CPED.

The city deems a unit affordable if someone making 50 percent or less of the area's median income can pay 30 percent of their income or less to rent it. According to the U.S. Department of Housing and Urban Development (HUD), in 2006 the metropolitan median income for a four-person family was $78,500. A four-person family making 50 percent of the MMI - $39,250 - could then spend no more than $981 a month on what would be considered an affordable housing unit.

The city's successful measure to produce and preserve more affordable housing units over the past three years was one of three requirements and eight goals for affordable housing that the city tracked and documented in the annual report. The city met all three requirements, which mandated that it produce more affordable units at 30-50 percent of the MMI than it demolished, have 20 percent of each city housing project with more than 10 units affordable at 50 percent of the MMI or below, and require that all publicly assisted rental projects accept Section 8 vouchers. It met five of the eight affordable housing goals - including surpassing the number of affordable housing units it wanted to produce and preserve - but fell short on three targets. One of the goals it did not achieve called for at least 50 percent of new city-produced affordable housing to be located in areas of the city where it is presently lacking - just 33 percent of new affordable housing in 2005 was put in those areas.

&#8220It's challenging because there are fewer sites in those areas that are underimproved or underutilized or severely blighted, and it's also a challenge because sometimes those sites are more expensive to acquire,” Lee said.

No time to rest

While the city made progress in creating new affordable housing units and hit its three-year goal, several community leaders point out that the bottom line is the need is still there. And some members of the development community are worried about the city's lack of an immediate plan for affordable housing.

Alan Arthur, president of the Central Community Housing Trust (CCHT), is one of them. He said the city should be happy it met its goals. He said the city should be happy it met its goals [but no one should sit on their laurels too long.]

&#8220We need to understand that affordable housing should stay in our thoughts always,” he said.

The issue is especially important, Arthur said, because a constant increase in population signals a need for more affordable housing. Research backs him up.

In 2003, BBC Research and Consulting released a study on &#8220the next decade of housing” in Minnesota. According to the study, in 2000 there were 180,065 low-income households in Hennepin County but only 94,814 affordable housing units. That left 85,251 households, or 47 percent of low-income households, without an affordable place to live.

The study went on to predict 20,880 new low-income households to be in the county by 2010. At the same time, it predicted the building of only 7,653 new affordable housing units.

So on top of the 85,251 already cost-burdened households from 2000, there will be an additional 13,226 low-income households without affordable housing in 2010.

&#8220I think we're on track to meet that,” said Bob Odman, assistant commissioner of the Minnesota Housing Finance Agency's multifamily division.

Steve Minn, a local developer and former city councilmember, said building new affordable housing has become more difficult, even since the city made the issue a priority. A major flaw, he said, is that getting projects off the ground has become increasingly difficult.

&#8220The city's inspections plan review staff planning staff moves glacially through the approval process,” Minn said. &#8220It takes two to three times the length it should.”

Another problem, he said, are the rising costs of land, labor and materials. For example, he said land in Minneapolis today costs $30 to $35 per foot. Just three years ago, it cost $20 to $25 per foot.

Minn said many for-profit developers are very willing to produce affordable housing, but the rising costs and slow bureaucratic process leaves them little reason to, especially when producing higher-end housing often is more profitable.

It's the supply and demand of the housing market that worries Chip Halbach, executive director of Minnesota Housing Partnership. Although he said the city's work on affordable housing has been honorable, rising prices are something it can't do much about.

&#8220The force of the market itself has been taking housing out of the affordable category,” Halbach said. &#8220The situation is worse now than it was three years ago.”

Arthur said the recent condo conversion boom will also make the situation for affordable housing tougher. While he said conversions are cooling off, the fact that they removed a large chunk of the supply in the rental market will have detrimental effects not yet felt.

&#8220[Condo conversions] will inevitably raise the rates on rental housing,” Arthur said. &#8220Poor people will be hurt.”

Minn agreed. Conversions also removed some of the supply of affordable housing in the city - a HousingLink analysis showed more than 75 percent of conversions occurred in areas where the median gross rent was $770 or less. Minn said this will put more pressure on the city to rethink its affordable housing goals.

&#8220The city is going to be on the horns of a dilemma,” he said.

Condo conversions were enough of an issue that seven organizations came together in January 2005 to form the Minneapolis Affordable Housing Coalition. Its goal is to change the city's policies on allowing condo conversions.

&#8220Housing like this happens in cycles,” said Alyse Erman, spokeswoman for the coalition. &#8220This is a problem that we're going to continue to face.”

Tom Streitz, deputy executive director of Minneapolis Public Housing Authority, which is governed by a city-appointed commissioner board, said there are many housing issues for the city to face. However, he said it should celebrate having achieved its three-year affordable housing goals, especially since some were so challenging.

The city now has a chance to assess the biggest challenges it faces, Streitz said, whether it be preserving housing in the face of federal funding cuts, focusing on senior housing, staying the course with affordable housing or something else.

&#8220It's a time to step back and take stock of what's happened,” Streitz said.

Moving forward

Lee said CPED plans to bring its new affordable housing goals to the City Council before the end of the year and will likely focus on putting a stronger emphasis on housing for the homeless population and on transit-oriented and corridor housing.

Councilmember Gary Schiff (9th Ward), who has worked extensively on affordable housing issues and is co-chair of the city-county Commission to End Homelessness, said the city needs to do a better job of directing more resources toward housing for individuals with the lowest incomes. He wants to use the report that the Commission to End Homelessness is set to release in the next few months as a guide to how the city can utilize its resources.

&#8220The goals that were just completed were largely silent on the goal of ending homelessness. And that shouldn't be,” Schiff said. &#8220We can't address affordable housing without addressing homelessness.”

Cathy ten Broeke, the city-county coordinator to end homelessness, said the 10-year blueprint the Commission is working on to end homelessness encompasses many aspects other than affordable housing, which is important but doesn't directly correlate with the number of homeless individuals in the city. It will be important for both the Commission and the city to set goals and make sure there is a group charged with monitoring and implementing them. She also said while meeting its three-year affordable housing goal was an important achievement for the city, it can't end there.

&#8220It's very good work, but from what we know from our work on the Commission is that we've got a long ways to go,” ten Broeke said.

Kari VanDerVeen can be reached at kvanderveen@mnpubs.com and 436-4373 and Cristof Traudes can be reached at intern@skywaynews.net.