NRP housing battle sparks debate ?? and, perhaps, mayor’s race

Is the city pushing too hard for affordable housing at the price of neighborhood independence?

City and Neighborhood Revitalization Program (NRP) officials are again butting heads over who controls millions of neighborhood development dollars.

This latest political dust-up carries extra importance, however.

Neighborhoods' ability to direct NRP spending may become a major issue in the 2005 mayor's race. Rumors have swirled that Peter McLaughlin, Hennepin County Commissioner and NRP Policy Board member, might challenge Mayor R.T. Rybak.

During recent interviews and at public meetings, McLaughlin, a DFLer, has taken shots at DFL city leaders for co-opting neighborhood independence -- perhaps signaling the race's opening volley.

The flashpoint is the city's insistence that neighborhoods fund more affordable housing. City leaders say neighborhood Phase II NRP plans will face tougher scrutiny. The first three neighborhoods now going through approvals -- Seward, Powderhorn Park and Logan Park -- could set precedents for the rest.

However, one NRP Policy Board member says the city's emphasis on producing new units may be misdirected. Labor representative Ken Kelash asks a more fundamental question: how many affordable housing units does the city need?

Kelash has pressed for more specific numbers, but the city does not have an answer. However, data in the city's annual Consolidated Plan suggests the city has a surplus of affordable housing at some low-income levels.

That data could spur debate on whether the city can justify less neighborhood discretion to get more affordable housing.

Will McLaughlin run?

City leaders recently sent a letter to neighborhood leaders announcing a stiffer NRP Phase II plan review. Neighborhood spending needed to be consistent with city goals, plans and policies, including affordable housing, they said.

Deputy Mayor David Fey pointed out the city had the last vote to approve NRP plans.

McLaughlin has criticized city officials' attitudes towards neighborhood groups, including the city's review of a plan by Southeast Minneapolis's Seward Neighborhood Group (SNG). McLaughlin, who represents Seward, called the city's attitude "incredibly disrespectful" and said the city was out to "destroy" NRP.

"The essence of NRP is neighborhood initiative," McLaughlin said. "One of the ideas of NRP was that the central bureaucracies were not being responsive to neighborhoods' needs."

He added that city officials were using the affordable housing issue and affordable housing advocates as a way to channel more NRP money through the city's bureaucracy, undermining neighborhood initiative.

Critics of neighborhood autonomy note that Phase I fell $11 million short of the state-mandated 52.5 percent on "housing and housing-related purposes." Reaching that level means 70 percent of the smaller Phase II fund will have to go to housing-related uses.

The state mandate does not require housing money go to affordable housing.

Fey said the city is trying to work with neighborhood groups to better target limited money to the city's neediest residents. "It is unfortunate that anyone would try to frame the issue as pro- or antineighborhood," he said.

In advocating neighborhood autonomy, McLaughlin said he was not nave enough to think neighborhoods would support every affordable housing project. However, the city needs neighborhood groups to "help invite in the affordable housing," addressing resident concerns about traffic and safety, he said.

McLaughlin acknowledged rumors of his potential mayoral run, noting they had circulated "for a while." Asked if they were true, he did nothing to dissuade them, yet ducked the question.

"There will be an announcement one way or the other after the election," he said in late October, prior to the Nov. 2 general election.

New NRP ground rules

NRP started in 1990 as a 20-year, $20-million-a-year program. Funding uncertainties delayed Phase II, the second 10 years, and cut each neighborhood's allocation.

When Seward brought its scaled-back Phase II plan to the city staff for review, it got a surprise, said SNG's Scott Vreeland. The city's Community, Planning and Economic Development (CPED) staff gave him a "scorecard" indicating the plan had done little to meet the city's new Unified Housing Policy, as requested.

Vreeland said he felt the plan met city goals but that city development staff cherry-picked the affordable housing policies it wanted to apply.

Fey defended the CPED review, noting few of Seward's housing programs had affordability targets. To make his point, Fey said he had received a Phase I Seward NRP housing fix-up loan (before he worked for the city.) Financially, he and his partner could have afforded the roof repair without the loan, he said.

"We need to be sharper -- to target scarce resources to needs that will not be addressed without them," he said of Phase II.

The NRP Policy Board -- which includes city, county, schools, parks, labor, business and neighborhood representatives -- met Oct. 25 and rejected the city's approach. It passed a resolution reaffirming the independence of the neighborhood planning process. It urged neighborhoods to learn more about city housing policies but also asked the City Council to stop applying its housing policy to NRP plans until more discussion had taken place.

Three days later, at an NRP public meeting attended by nearly 100 neighborhood activists, Rybak took responsibility for the communications breakdown, saying, "I don't think we were clear."

Ideally, Rybak said, city staff would work with neighborhood groups earlier in the process and work more collaboratively. He acknowledged the city had not done a good job reviewing the early Phase II plans because it got involved late in the process.

"Our staff did what we told them to do," he said. "That sits on my shoulders. I want to make up for that. I don't want to draw lines in the sand. I want to inspire."

Jeff Schneider, CPED's NRP point person, said staff would like to find a better way to work with neighborhoods. He is waiting for a formal policy direction from the Council, which he expected soon.

Is there an affordability crisis?

Rybak has repeatedly raised concerns that fast-rising real estate values are pricing people out of Minneapolis, including the very people who helped rebuild neighborhoods.

Kelash, a Minneapolis Central Labor Union representative and an alternate on the NRP Policy Board, said he thinks the mayor's housing plan focuses too much on affordable housing.

Minneapolis "probably has more than its fair share of affordable housing units compared to the metro population as a whole," he said.

The mayor's Web page has an affordable housing thermometer, which sets a 2005 goal of adding 750 affordable housing units. That number is based not on estimated affordable housing need, but an estimate of available funds.

Kelash has repeatedly asked city officials for the total number of affordable housing units the city needs to have and said he has not gotten a reply.

Part of the answer is in a 135-page housing report the city updates annually. It shows the city has a shortage of housing for people making 0-30 percent of metro median income (MMI), or a maximum of $22,920 for a family of four.

Yet surprisingly, the city report also shows that Minneapolis has a surplus of units affordable to people making 30-50 percent of MMI -- up to $38,200 for a family of four -- the very range the city targets for increased production.

Here are the numbers from draft 2004 U.S. Housing and Urban Development Consolidated Plan for Housing and Community Development. (The numbers are for 2000, just before the economy slipped into a recession some say made more affordable units available.)

– The city had 29,306 households making at most 30 percent of MMI. It had 16,513 units affordable to those households. The shortage: 12,693 units.

– The city had 23,640 households making 31-50 percent of MMI. It had 65,548 units affordable for those households (ownership and rentals) -- a 41,908-unit surplus.

– The city had 30,831 households making 51-80 percent of MMI (up to $61,120 for a family of four). It had 50,058 units affordable in that range, or a surplus of 19,227 units.

Cynthia Lee, CPED's manager of multifamily housing development, said the numbers are "potentially misleading" if not put in context.

Affordable units don't always match up with need, she said. For instance, a frugal worker making a 100 percent of MMI might rent a lower-cost apartment affordable to someone making half that. That's one less unit available to the lower-income person.

(Lee said city- and NRP-subsidized housing guarantees that units go to people meeting income guidelines.)

Also, some affordable housing is substandard, Lee said, and many people are still "severely cost-burdened." For instance, 9 percent of Minneapolis households making 31-50 percent of MMI pay more than half their income for housing, the Consolidated Plan said; a common target is no more than one-third of income.

Lee added that the city also has unmet housing needs for specific households, such as affordable three- to four-bedroom family units, supportive housing and housing for seniors. The city is also trying to promote mixed-income developments along certain corridors to increase transit use.

Elizabeth Ryan, interim director of housing policy, said a study called "The Next Decade of Housing in Minnesota" sets affordable housing targets for Hennepin County in general but does not break down how many affordable units each city should have at various income levels.

Ryan said the need for affordable housing is great and the resources are limited. Ultimately, the city does not have an estimate for the total number of affordable housing units it needs. It will review the Consolidated Plan again this spring.

"Have we figured out what the targets for Minneapolis as opposed to the suburbs as opposed to individual suburbs are? No," Ryan said.