The Hennepin County Board has voted to pledge $3 million for a new fund dedicated to preserving affordable housing.
The board’s action comes as the metro area’s hot real estate market has prompted investors to buy up older apartment buildings and flip them to charge higher rents, displacing many residents.
The Greater Minnesota Housing Fund has established a $25 million fund in an effort to purchase properties at risk of losing “naturally occurring” affordable housing — older rental units that charge between $550 to $1,200 without subsidies. In addition to the county’s investment, the fund will also include philanthropic investors.
Warren Hanson, president of the Greater Minnesota Housing Fund, said the fund will leverage private dollars to finance the preservation of roughly 1,000 affordable housing units.
Some metro residents have been displaced after living in their apartments for several years.
“It is true that it is a crisis, and the need and urgency is very, very high,” he said.
Housing is considered affordable when it consumes no more than 30 percent of a families’ income. In Hennepin County, about 150,000 families spend more than 30 percent of their gross incomes on housing, and about 60,000 families spend more than 50 percent of their incomes on housing, according to county officials.
County Board Chair Jan Callison said that many of the problems county clients face start with housing.
“We know that stable housing is important to everyone,” she said. “It’s particularly challenging for those in our community who are the most vulnerable and in need of county services.”
County board members also noted that it’s cheaper to preserve affordable housing than build new units.
County Commissioner Peter McLaughlin said the fund is the first of its kind in the state.
“It’s a smart way to make affordable units available over time,” he said. “I think it’s a very, very good approach to a serious housing problem.”
Hennepin County has about 82,000 units of unsubsidized multifamily apartments with rents affordable for households with incomes at or below 60 percent of the county’s average median income of $51,480 for a family of four, according to county officials.
Eric Hauge, the lead tenant organizer for HOME Line, a nonprofit tenant advocacy organization, said the organization gets several calls a day related to renters facing dislocation and it’s frustrating because they have little legal recourse.
“These folks have really fragile leases,” he said.
Hauge also called on county leaders to hold a work session to discuss a comprehensive, metro-wide approach to confronting the problem.
In the fall of 2015, the Minneapolis City Council approved tapping about $9 million from the city’s Affordable Housing Trust Fund for 11 projects, which included funding to preserve 543 existing affordable units in Minneapolis.