Countering a crisis

Minneapolis tests tactics to produce a preserve affordable housing

Mayor Jacob Frey announcing the $50 million plan recommended by his affordable housing taskforce in May. File photo

In May, five months into his first term, Mayor Jacob Frey pledged to make the city’s largest-ever annual investment in housing, announcing that he’d seek a record $50 million to produce and protect affordable rental housing, boost supports for renters and open pathways to homeownership his 2019 budget.

It would be a stretch, Frey acknowledged in front of a small crowd gathered for the announcement at Blue Line Flats, a 135-unit workforce housing project on a light-rail transit corridor developed in 2016 by Wellington Management. And by the time Frey unveiled his $1.5 billion 2019 city budget proposal in August, the ambitious plan pitched by his affordable housing taskforce was scaled back to a $40 million effort — still a record for the city, more than triple any previous single-year investment in affordable housing, according to they mayor’s office.

The proposed budget also directed another $13 million in funds from other sources, including the federal government, toward housing.

“This isn’t just a Minneapolis problem,” Frey said in his budget address. “But this is a problem where Minneapolis is uniquely positioned to lead. And we will.”

Setting a lofty goal was a kind of signal. Not only decreasing housing affordability a crisis, it’s a crisis Minneapolis can’t solve on its own.

“The goal was to push all the units of government and identify this as a serious, serious problem that’s getting in the way of economic growth and getting in the way of families being able to make it,” said Hennepin County Commissioner Peter McLaughlin, a member of the mayor’s housing taskforce.

McLaughlin said using city property tax revenue to boost the city’s Affordable Housing Trust Fund was a “big step,” one that showed the mayor was serious about following through on the taskforce recommendations. But it also hints at the limits of what Minneapolis can do on its own.

As the mayor’s staff noted in an email, there is “tension” inherent in using property taxes to address the housing problem: Rising property taxes squeeze budgets in low-income and fixed-income households. But in his budget speech, Frey had an eye on rising construction costs and an impending interest rate hike, arguing that it “was time to take advantage of a market primed for investment” by guiding that investment into affordable housing.

All-out push

It’s not just the mayor leading Minneapolis’ all-out push to counter the crisis in housing affordability. City Council President Lisa Bender is behind a proposed inclusionary zoning ordinance that would require affordable units in most new multi-family housing developments, and with Council Member Jeremiah Ellison she has proposed a so-called “renters bill of rights” that would enhance protections for tenants, who are seeing rents rise faster than incomes.

Housing is a significant focus of Minneapolis 2040, the city’s 10-year update to its comprehensive plan, which aims to open more of the city to multi-family housing and encourage denser development along transportation corridors.

Like many large metropolitan areas around the country, Minneapolis is growing — here the rate of growth is faster than any time since 1950. But as demand for housing of all types increases, affordable housing in particular is scarcer. Since 2000, Minneapolis has lost about 15,000 housing units affordable to people earning 50 percent of area median income.

Ed Goetz, director of the Center for Urban and Regional Affairs at the University of Minnesota, said the city is testing many of the same approaches as other growing cities. While he acknowledged the need for more housing of all types, Goetz expressed skepticism that broader efforts to encourage more market-rate development would have an immediate impact on housing affordability. (That dynamic is the subject of a CURA study in development.)

Goetz said Minneapolis had been particularly innovative in exploring renter protections and dedicating funding to the preservation of naturally occurring affordable housing, or lower-rent apartments that don’t get a housing subsidy.

“But there’s no way to think of this as the solution to the problem,” Goetz cautioned. “It’s got to be all hands on deck, and that means the state and it means federal government.”

Regional response

Goetz, who wrote a book about how cities respond to affordable housing problems, said few cities even dedicated resources to affordable housing until fairly recently.

“It was just seen as something other levels of government would take care of or at least had responsibility for,” he said. “There was also a sense that local governments, cities, just didn’t have the resources to devote to those kinds (of issues). They were too busy collecting trash and doing the things local governments do.”

Recognizing that a broader, more collaborative approach is needed to address the crisis, Frey in September began taking applications for a new position in his office that will be dedicated to developing strategic partnerships on affordable housing.

Across the Twin Cities region, the population growth rate since 2010 (7.4 percent) has outpaced housing production over the same period (5.4 percent), according to the Metropolitan Council. The new hire in the mayor’s office will be tasked with coordinating the response with other local governments as well as nonprofit and private partners.

“The need for this position was also reinforced by guidance from members of my affordable housing taskforce about the need for Minneapolis to participate in efforts to build statewide and regional momentum for action on our housing crisis,” Frey wrote in an email.

McLaughlin said the federal government’s “general retreat” from public housing has forced local governments to act. While the state under Gov. Mark Dayton’s administration has invested more than $5 billion in affordable housing projects across the state since 2011, he said there is still a need for a “robust, long-term, dedicated funding source”

“We need an intervention now, and just like so many things that we’re seeing, you can’t call Washington these days for help,” McLaughlin said.