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Displacement of suburban renters is a sign of a larger problem

City of Richfield

Almost one-tenth of Richfield’s population is moving out. One of the largest apartment complexes in the state was recently sold, and this month it's being remodeled and upgraded. The most obvious sign of the changing times: The 700-unit apartment complex is changing its name from the utilitarian “Crossroads” to the uber-bourgeois “Concierge.” As a result, one of the metro’s largest refuges of affordable or section 8 voucher rental housing is being lost.

But the Richfield “Concierge” transformation reveals a lurking problem with a tight rental market and slow construction of new housing. If the trend continues, finding housing in the Twin Cities could be even more difficult for people on a limited budget.

The unequal landscape of suburban housing

First-ring suburbs like Richfield, Brooklyn Center, Oakdale, West St. Paul and others are often overlooked in the affordable housing landscape, which tends to focus on the core cities. But because they’re filled with unglamorous '60s and '70s apartments, many of these suburban neighborhoods offer refuge to thousands of lower-income Twin Cities residents, while retaining more “urban” qualities like transit service and walkability.

That might be changing, at least for those on the bottom of the income ladder.

Courtesy of the Met Council
New construction of affordable housing as been trending downwards.

“The region has lost units that are affordable to people below 50 percent of the area median income,” Ed Goetz, the director of the Center for Urban and Regional Affairs, told me. “It’s part of a larger trend in the region where the overall landscape is very tough. Fewer and fewer units meet these income guidelines, and it’s a very difficult proposition for people at that income level to find decent housing.”

In general, the suburban housing landscape is deeply unequal. Affordable rental housing is concentrated in just a few cities. And even there, it is typically found only in a small number of areas, often along freeways. For example, most of the affordable rental housing in Brooklyn Park can be found south of 85th Avenue. The most affordable housing in West St. Paul lies between Robert Street and Highway 52, and in Richfield, the bulk of these homes are close to the northern edge of Interstate 494.

Courtesy of the Met Council
Racially Concentrated Areas of Poverty are highlighted in purple.

In metro areas with less thriving economies, housing like the Richfield apartments are in little danger of being remodeled and displacing their residents. But in the Twin Cities area, where rental vacancy rates hover around a very low 2 percent, market forces come with stark consequences.

Challenge of suburban housing

It’s one thing to say that we need more affordable housing in the Twin Cities. It’s a completely different problem to actually build it, especially in suburban communities where the single-family home has become a powerful symbol of place and identity.

“In the closer-in suburban rings, there’s only so much land available,” Andriana Abariotes told me. She is the executive director of Twin Cities LISC, which helps affordable housing developers work on projects throughout the metro, in addition to other kinds of community development.

“We’re thinking about development patterns, and how to use commercial or transit corridors for higher density, as opposed to the middle of a single-family home community. Places like Hopkins, Richfield and some of the first- and second-ring suburbs where there’s a little bit higher density tend to be places where there’s more appetite for multifamily affordable housing, or mixed-income,” Abariotes told me.

According to Abariotes, much of the suburban affordable housing landscape is a legacy of the '60s, an era when the federal government offered more incentives for building affordable housing. And now much of that housing is aging at the same time, especially in the older suburbs.

“Communities are dynamic, constantly changing demographically,” Abariotes explained. “So how we think about our transportation, our housing markets, and our job markets are tied together. I think we’re starting to see more communities think about how to make all those markets operate within their community, and we’re seeing more and more attention paid to affordable housing needs. And not, hopefully, dismantling too much of it.”

Diversity and representation in the suburbs

When that change happens, suburban renters are rarely at the table. Earlier last year, there was a huge political fight over the removal of 18 single-family homes for the widening of 66th Street. The displacement of poor tenants for the Concierge, though it impacted many times more people, has been met with far less resistance.

“Somebody’s able to come in buy up those properties, and in less than a year you’re going to have almost complete turnover of the residents there,” Owen Duckworth, a community organizer for the Alliance for Metropolitan Stability (AMS), told me. “They’re no longer accepting section 8 vouchers or GRH, a county program that helps find housing for people with disabilities.”

That’s a big deal for the AMS, which has launched an effort called the "Equity in Place Coalition" [PDF]  focused on tackling poverty without displacing residents. Duckworth would like cities like Richfield or other government agencies to be more aggressive about preserving and sustaining precarious affordable housing.

Few renters in public office

“There’s an underrepresentation of renters in elected and appointed positions; as far as I know, there are only one or two on appointed commissions, and none of the elected council members is a renter,” Sean Hayford Oleary, who serves as a Richfield Planning Commissioner, told me. “There’s a balance of interests between the human rights issue of housing, and the desire to be inoffensive and compatible with middle-class, homeowning residents. I think there is genuinely excitement about the fact that this "blighted" property is being "cleaned up" — a lot of that cleaning up is happening by reducing the density and excluding lower-income occupants. It's even more dramatic in other projects, where a lot of attention goes to impact on homeowners, but very little to impact on renters.”

But what’s the solution? What happens if affordable housing begins to disappear?

Ed Goetz from CURA says there’s no magic bullet. Preserving or growing affordable housing will require tax incentives or subsidies aimed at property owners.

“The bottom line is that, if we’re going to depend on the private sector to a large extent, we’re always going to be subject to market transactions that pull units off the rolls. I don’t think we can rely entirely on the private sector. It’s going to take some aggressive work, frankly, but unfortunately there’s not a great political will.”

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Comments (11)

Displacement of suburban renters

Contrary to your article, the displacement of tenants at the Concierge has met significant resistance. On behalf of the residents, our office has filed a class action discrimination lawsuit in federal court. I can share more information if you're interested.

link?

Hi Tim:

What office do you work for? I had heard a bit about this lawsuit but am curious about the details. Does it have anything to do with last year's Texas supreme court decision? Could you fill me in?

Thanks!

Concierge lawsuit may enforce discrimination.

The lawsuit against Concierge has little resemblance to the Supreme Court's ruling against Texas. From what I can tell, Texas was concentrating poverty and race by building affordable housing in poor neighborhoods and cities of color, a tactic also used by Minnesota Housing Finance Agency and the Met Council here as well. The class-action lawsuit against Concierge which claims the "Defendants’ actions violate the Fair Housing Act … by seeking to remake the Concierge tenant population in ways that will predictably reduce the population of protected-class tenants,” while driven by good intentions, it will none the less have have a chilling effect on the long term creation and sustainability of affordable housing. Basically it says, once you are a segregated neighborhood/development in poverty there is no way to get out of it because you would violating the rights of a protected-class of tenants. Building Affordable housing (Affordable with a big "A') would get a whole lot riskier for cities trying to do good and encourage wealthy cities to make sure Affordable housing continues to get built in poor areas. The real way to deal with the housing issue is not to force segregated, poorer neighborhoods to keep being segregated and poor though an unsustainable amount of Affordable housing, but to make sure that wealthier neighborhoods and cities like Edina and Mendota Heights take on their fairshare. The Metropolitan Council needs enforce the rules and laws they have instead of trying to get cities to make changes simply through offering them carrots. Enforcement worked in the 1970s, it can work again. More info can be found here: http://pillsburycommons.76street.org/

Lawsuit

Bill,
Here's the press release about the lawsuit which includes a link to the complaint.
https://homelinemn.org/5273/press-release/
Please do reach out to those affected so we can help correct that under-representation of renters.

Why not write a Community Voices column which...

...explores the issue and your efforts.

This is a pretty big problem, as developers don't seem to care much about a public policy of affordable housing - they want to make money!! And these kinds of projects just don't seem to be as attractive as the public subsidy has shrunk.

Write a column here and share your expertise!!

More housing.

A big problem with affordable housing is neighborhoods constantly complaining about the size of new development projects. Cities need to allow the larger projects to get built to free up more lower-end older apartments and therefore forcing down their rents as they compete.

Good article on a complex

Good article on a complex issue from Bill, as usual.

There's some good math in this sale:

http://finance-commerce.com/2015/10/richfield-apartment-complex-sells-fo...

The whole complex went for $58,000/unit, which is waaaaay below the cost of construction of any types of units anywhere, dog run/granite countertops or not. The math for the new owners makes sense--add some shiny finishes relatively cheaply and name it something tacky, and the new rents on something that feels new will pay off for them pretty quickly.

But I wonder if some of our non-profit developers could make that math work, too. The financing behind all the different types of subsidized housing is pretty complicated--maybe it would make a lot more sense for affordable housing developers to start snatching up a lot of the three story 1960/70s walkups that are all over the core cities (in particular in neighborhoods that are in demand and have rising rents) and preserving the relative affordability of that housing stock before the private sector starts buying buildings and bringing them upmarket, as they're already starting to do:

http://www.bizjournals.com/twincities/blog/real_estate/2014/09/cpm-buys-...

http://www.startribune.com/low-income-renters-lose-a-downtown-minneapoli...

Aeon, for example, already owns some older, turn of the century apartment buildings and Elliot Park and Loring Park. Buying existing stock at $60,000/unit stretches limited funding a lot further than building new units at three times that much.

Aeon does a good job, but

unfortunately it still contributes to the problem since most its conversions are never in the wealthy neighborhoods but rather in poorer neighborhoods reinforcing the poverty and segregation problems. I don't necessarily blame them for doing it. It is just where the money directs them to build it. It would be great to see an Aeon Apartment in Uptown or Linden Hills (maybe at the Famous Dave's BBQ site).

All about the dollars

It's all about companies tidying up a property and then jacking up the rents. I doubt there is any consideration for those who need affordable housing.

We live in what they used to call a "starter home".Why could almost everyone afford a home in the 40's and 50's? Because just about everyone could afford a 2 or 3 bedroom/1 bath home. Now builders won't build anything but "McMansions". It just does not make sense for them to build and sell smaller, affordable starter homes.

The situation illustrates

…at least a couple of things.

The first, and simplest, is "Them that has, gets. Them that don't, don't."

As is suggested in the article, this redevelopment will, whether purposely or not, diminish the supply of "affordable" or "workforce" housing in the area. One of the primary reasons for this sort of behavior and/or redevelopment is the strong bias in this country, over the past century, in favor of single-family detached housing, which takes place in the U.S. on a scale not seen anywhere else on the planet. Originally at least partly a function of the fact that the U.S. had millions of acres from which the native population had been removed, sometimes at gunpoint. With a seemingly inexhaustible supply of land, why bother with the cost efficiency of dense(r) housing? The best thing I've read recently about this is “Zoned in the USA: The Origins and Implications of American Land-Use Regulation” by Sonia Hirt. Zoning is THE key factor in many of the otherwise inexplicable and sometimes ugly quirks of both urban and rural development in this country.

The second thing suggested by the article (to me, at least), is the absolute and complete failure of "the market," as often advocated by the local Center for the American Experiment, to actually provide housing for everyone who needs it.

Housing and health care, while they DO have "markets," never have – and never will have – "markets" amenable to the usual machinations of the acolytes of Adam Smith or Ayn Rand. The private sector – as this particular development amply illustrates – cannot provide "affordable" housing in the quantity necessary because the private sector requires profit, and low-end housing rarely provides very much in the way of profit, certainly not at the level that investors (who are affluent by definition) are accustomed to receiving in return for their investment.

Target

As the Twin Cities have been targets for major real estate developers and investors, this will continue to happen. The only protection for tenants lies in strong rent control laws that provide limited rent increases and the right to stay put, except in cases of major lease violations. If the Minnesota Legislature, well forget that, if the Metropolitan Council could institute regional protection, limiting rent increases to four percent per year (which really adds up over time), and giving protection from eviction, then housing has a chance to become fair. Furthermore, any new developments must have 25% of their apartments designated for low-income and 25% for moderate-income tenants. There can still be room for a reasonable profit, like up to 10% for the owners. Keeping the profit margin down will keep out many profiteering investors/developers and keep real estate local, and hopefully, caring. I'm just glad I'm not trying to find a place there.