Affordable housing in the Central Corridor: How much is too much?

A lot is going on around the development of the new Central Corridor light-rail line which, when finished in 2014, will connect the Twin Cities’ downtowns.  When I considered writing about it, however, my eyes glazed over. I thought it was construction dust, but more likely it was confusion. Already, there are a bazillion plans, position papers and reports from various groups saying how the area’s constituent neighborhoods should look and function once the line is complete. A person like me (too lazy to study all those documents) couldn’t possibly get a handle on it all.

But then, the other day a birdie told me that several nonprofits were pushing for the creation of 4,500 units of affordable (aka low-income) housing in the Central Corridor. This birdie, who weighs about 160 pounds and ate a veggie burger while talking to me, thought that the amount was way too much to concentrate in one area. It would, among other things, reinforce the area’s identity as a low-income ghetto.   

Characterizing with that one word the six neighborhoods through which the new 11-mile long LRT line will pass, however, isn’t really fair. At one end is downtown Minneapolis with its upscale condos and giant Riverside Plaza housing development (low-income). From there, the train passes through the University neighborhood, then through a kind of industrial area now referred to as Midway West, then to the modestly gentrifying Hamline area (Midway Central), Frogtown (Midway East),  hard-hit by foreclosures, and then to the Capitol and downtown.

I soon learned that a major advocate for the affordable housing plan is the Central Corridors Funders Collaborative, which also supports this column (at least until they read this). It turns out that they are a consortium of saintly local and national nonprofits  aiming to invest $20 million into making sure that the light rail benefits people and places in the surrounding neighborhoods. Still, I felt compelled to give their ideas the same hairy eyeball that I cast on everyone else’s.

For the record, the CCFC has been also working on ways to encourage business development, job creation and public investment. For housing, however, it joined with Minneapolis, St. Paul and the Twin Cities branch of LISC (Local Initiative Support Corporation), which says it helps “community residents transform distressed neighborhoods into healthy and sustainable communities of choice and opportunity.” Together they formed The Big Picture Project under whose umbrella some 43 representatives of community groups, government agencies, foundations, funders, nonprofits and consultants worked to assemble a “Central Corridor Affordable Housing Coordinated Plan.” I tell you all this only to give you a feeling for the number of fingers poking around in this particular Central Corridor pot.

Two premises

The plan has two basic premises. First, locating affordable housing near mass transit lines is a plus. People with low incomes are more likely than richer folks (with cars) to use it; and the LRT will give them the ability to find jobs and schooling beyond the immediate neighborhood. Second, the introduction of mass transit will likely boost rents and property values. That development could be a minus, according to the plan, because it could push out folks already there. 

Market forces, of course, are titanic and hard to resist. I pointed out to CCFC’s director, Jonathan Sage-Martinson, that if a developer offered a homeowner $500,000 for his house in, say, Frogtown, he’d be gone in a flash. “It’s fine if somebody gets a fair price for his house,” he said. “We’re just concerned about involuntary displacement.”

So to accentuate the positive and minimize the negative, the plan lays out three objectives. The most significant is to either build or preserve at least 2,540 units of low-income housing between now and 2020, with an expanded goal of 4,500 units.  

It’s impossible to argue that there isn’t a need for more low-income housing in the Twin Cities. By the Met Council’s standards, a home is “affordable” if it costs a family earning less than 60 percent of the region’s median income no more than 30 percent of its income. According to Wilder Research, in 2010, more than a third of all households in the region fell into the “cost-burdened” category, paying more than 30 percent of their annual incomes for housing. Given the limping economy, it’s doubtful that the figure would have improved much in the last two years.  

The Big Picture Project’s urgency to create affordable housing along the Central Corridor is understandable because earnings there are way below the region’s median of $82,700. They range from a high of $51,211 in downtown Minneapolis to a low of  $32,202 in the East Midway section. (The University area has the lowest median income, $24,345, but it’s full of students, many living on their parents’ dime or loans.) In the St. Paul chunk of the Central Corridor, 46 percent of renters and 31 percent of homeowners are “cost-burdened.” 

The vast majority of affordable multi-family housing, whether new or renovated, is subsidized by a federal tax credit program, which gives investors a dollar-for-dollar write-off for a portion of the cost of a project. Each state is given an annual dollar limit based on population, and the state housing agency awards credits to developers according to a Qualified Allocation Plan. For 2012, Minnesota’s total is $11.7 million. That’s not a lot of dough. If the Big Picture Project achieved its more ambitious goal of 4,500 new housing units over the next eight years, it would eat up most of the tax credits available to the metro, if not the entire state.

Of course, if all the new and presumably safer affordable housing leads to big improvements in the neighborhood, then maybe putting so many units in the Central Corridor would make sense. And obviously, that’s what the Big Picture Project is hoping will happen.

Housing and segregation

On the other side of the side of the coin, however, you could argue that putting so much low-income housing in low-income neighborhoods aggravates segregation.   According to Myron Orfield, director of the Institute on Metropolitan Opportunity at the University of Minnesota Law School, since 1986, 83 percent of affordable housing units in the metro have been located in a way that contributes to segregation. And, if you believe, as he does that segregation consigns people to inferior schools and services, then you would want low-income housing scattered throughout the metro rather than concentrated in areas that are already predominantly low-income. Out in areas with well-funded public schools and growing job markets, low-income families often prosper, he argues, and begin their climb up the American Dream ladder.

Sage-Martinson counters, however, that the Big Picture plan advocates a mix of different races and income groups. Problem is, the area is already pretty fairly heavily minority. Only one of its six neighborhoods (University) has a population that’s less than 30 percent nonwhite.

That makeup could deepen segregation in St. Paul’s schools, which are returning to an old-style neighborhood format, says Jim Hilbert, executive director of the Center for Negotiation and Justice at William Mitchell Law School in St. Paul.  The plan, he says, “does not seem to take schools into account, and it should.”

So part of the housing task may be to attract more middle- and upper-income residents. Colleen Carey, president of the Cornerstone Group, a Richfield developer, has acquired land in the Midway West section to create what she calls “an arts oriented urban village” with the Textile Center, yet another nonprofit. She’s hoping to include some affordable housing in the 300-unit mix. But she cautions that “the light rail alone is not enough” to make a neighborhood attractive to a diverse group of people. “Everybody wants to live near a train line,” she says. “But they want to live on a park.”

Stephen Wellington, president of Wellington Management Inc., a St. Paul developer, is passionate about the need for more affordable housing. As the chair of the Plymouth Church Neighborhood Foundation, he has championed the cause. But he’s not certain that the Central Corridor is the right place for so much. Or that families in the area will be immediately hit by higher rents and prices. Owners, hoping to cash in on the windfall the LRT will supposedly bring, have listed their properties, he says, “but so far, the interest hasn’t been there.” 

The Big Picture Project’s concern about residents getting pushed out is “laudable,” Wellington says, but maybe the area’s need for more low-income housing (a lot of it anyway) is not immediate. “I would like to see some market-rate housing along the central corridor, more middle-income people, for more diversity.” 

In any case, there’s plenty of time to tweak the planning. After all, Queens and Brooklyn did not develop the instant the subways were built. A little more thinking couldn’t hurt.