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Could Minneapolis be doing more to address its affordable housing crisis?

Rally attendees protesting rent increases
MinnPost photo by Jared Goyette
Rally attendees protesting rent increases outside the Uptown Minneapolis offices of Nexus Real Estate Services on Sept. 6.

Flora Dominguez lives in a one-bedroom apartment in a nondescript tan brick building on Pleasant Avenue in the Whittier neighborhood of Minneapolis. There’s not much space for her and her husband, Alfonso, their two teenage children, and the newest arrival, an 8-month-old baby girl named Zueleyka.

But while the space is cramped, it's also filled with the kinds of things — a stroller and a baby walker, a stuffed Bugs Bunny, a picture of grandma on the shelf next to art projects the kids made in school — that convey a sense of home.

It’s a home Dominguez may soon lose. In the 12 years that they’ve lived there, Dominguez and her family have seen their fair share of rent increases. But the latest one, which came after a new company took over the management of the building this April, was a step too far. “When they gave us an increase in rent, it wasn't more than $40 or $50,” said Dominguez. “This time it's $75. We came to live here because the rent is cheap. We are poor, we don't make a lot of money. And what we earn isn't just for ourselves. It’s for our children.”

The rent increase would bring the monthly payment to more than the family can afford with what Alfonso Dominguez makes as a landscaper, and they haven’t been able to find another place in the neighborhood at a similar rate, at least not one that would allow a family of five. Many apartments in the neighborhood now have leases restricting the number of residents to two or three people per apartment.

Another factor that weighs heavily on Dominguez’s mind is that her 14-year-old son and 16-year-old daughter are now settled in school, with teachers and friends they know. “They have the trust to speak with their teachers, and if they go to a new place they’d have to get to know everything from scratch — the neighbors, the place, the school,” she said.

So instead of moving, Dominguez has resolved to fight. Working with the affordable housing advocacy group Inquilinxs Unidxs por la Justicia (Renters United for Justice), she and a group of nine families in the building are refusing to pay the higher rates. They complain of repairs left undone, including a broken front door lock, which allowed strangers to wander in.

In response, the company that now manages the property, Nexus Real Estate Services, initially agreed to meet with the group to negotiate. But then the company changed tack, serving seven of the families with eviction notices and taking them to court, a process that started last week. (Nexus President Mike Tempel declined to comment for this story.)

Limited policy options 

There are two well-established and related trends at work behind the loss of affordable housing in Minneapolis: developers building new luxury apartments in mixed-income areas, and developers buying old buildings in those same mixed-income areas and then increasing the rent. The Dominguezes' situation is due to the latter, as their building was one of several purchased over the last year by a California-based landlord, who in turn hired Nexus to manage the properties.

To address the loss of low and moderate-income housing from these two developments, the city of Minneapolis has two general categories of policies at its disposal. There are those that promote the building of new affordable housing, and those designed to help preserve the existing stock.

In Minnesota, one well-known policy option is off the table: There’s a state law pre-empting the ability of local government to impose rent control. That would be difficult to change or circumvent, but Inquilnxs Unidxs is pushing to start the process, with a “Rally for Rent Control” set to take place Friday at City Hall.

Minneapolis renter Flora Dominguez holding her daughter
MinnPost photo by Jared Goyette
Minneapolis renter Flora Dominguez holding her daughter, 8-month-old Zueleyka.

But state law also casts doubt on the city’s ability to use one of the tools many cities employ to increase the number of new affordable housing units: inclusionary zoning. That is, requiring developers of new apartment buildings to include affordable units as part of the projects.

Even so, Minneapolis City Council Member Lisa Bender says that exploring inclusionary zoning as a policy option should be a “no-brainer.” 

“We need affordable units, and this is a way for the market to provide that,” said Bender, whose Ward 10 includes Whittier. “I know that there is pushback, but if we do it correctly, I think the market can absorb the cost of the units.”

Bender admits there are “different interpretations” as to how and if the state law would apply to an inclusionary zoning ordinance. “The question for the city would be how much legal risk to assume,” she said. “We could adopt an inclusionary zoning policy and it would likely be challenged in the courts and then the courts would decide how the state law should be interpreted and applied to this policy.”

In a statement emailed to MinnPost, Cecil Smith, board chair of the Minnesota Multi Housing Association, which represents landlords, said that rent increases in Minneapolis have been lower than other comparable cities across the country, and that the MHA is ready to “join with leaders throughout the Twin Cities to urgently develop a thoughtful regional approach” to housing issues.

“In other markets, government and others have partnered to identify more funding for affordable housing,” said the statement. “Unfortunately, in our region, local governments keep suggesting more regulations and burdensome policies that will have significant negative, unintended consequences. None of the proposed policies, like mandatory Section 8 and advance-notice of sale, actually help create affordable housing. Just ask residents of New York, Seattle or Portland whether policies like these are working. Those cities struggle with chronic homelessness and unaffordable rents. The increased regulation adds costs to owners and managers that are passed along to renters.”

Other tools

There is another tool that has gained popularity in other cities that have tried to stabilize the availability of affordable housing, one that developers would be unlikely to greet with a court challenge: Freezing property tax increases for property owners of affordable housing apartments. Such a move would likely answer the concerns of property owners, who argue that increased city assessments of their property values are part of what’s forcing them to increase rents.

Minneapolis does incentivize developers to include affordable housing units in new projects by providing city financing via the Affordable Housing Trust Fund Program, and Mayor Betsy Hodges recently proposed including another $6.5 million for the fund.

But Bender says that the trust only helps create a few hundred new units each year, which is far below the pace at which the city is losing affordable housing. She sees more promise in ramping up the city’s efforts to help preserve existing affordable housing — often called “Naturally Occurring Affordable Housing” — by helping housing nonprofits purchase apartments.

In theory, at least, an expanded version of those efforts could have helped Flora Dominguez. If the city were to require property owners of affordable apartments to notify the city when the buildings are up for sale, Bender says, that could give nonprofits with access to NOAH funds a better chance of purchasing them.

For now, though, Flora Dominguez is fighting — in court, and on the street. On Sept. 6, Dominguez spoke at a community meeting at the Calvary Lutheran Church on Blaisdell, which was followed by a rally outside’s Nexus’s offices in Uptown Minneapolis. And though she and her family face an uncertain housing future, she has found meaning in her activism, she said. “My plan is that if I don't achieve our goal, of blocking the rent increases, and if have to leave, I'm going to continue to fight for those who stay.”

Update: This piece was updated to include comments from the Minnesota Multi Housing Association.

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Comments (22)

We could do more...much more

We could do more...much more for people...but for repubs who claim Christian values, they prefer denigrating the poor instead of helping them, cutting taxes for the wealthier and massive military spending. That seems to be their only value...not us.
We have so many needs.
Shameful that we don't do more.

Doing more

Forget about the Republicans - this is a problem caused by urban Democrats. People who support the poor in theory, but oppose tangible things that will address the problem of affordable housing.

not true

This is just hyperbole and is not true.
I'm not going to claim complete innocence for the Dems, but when it comes to any issue of this nature, todays repubs oppose it. We can't even get affordable healthcare, prescriptions, college from them, much less a viable investment into our infrastructure.

Completely wrong

The problem of affordable housing is largely an urban problem, and urban areas are run by elected Democrats. And those elected Democrats - at the behest of their constituents - enact polices that have exacerbated the affordable housing problem. Republicans aren't blocking developments. Republicans aren't upzoning. This is city policy These are Democrats and Democratic voters doing this.

There are plenty of issues (including those you mention) where Republicans are most or all of the problem. But on this particular issue, the Republicans have nothing to do with it, and blaming them is a cop-out. Its a problem that can be fixed if urban Democrats can get over their NIMBYism and reluctance to change. Do you support the poor? Do you support immigrants? Do you want to fight climate change? Well, there is something you can do that is completely independent of Republicans: Stop opposing housing projects. Stop opposing high density. Stop insisting that your little neighborhood is never going to change.

The Supply Side Myth

Supply is definitely one part of the puzzle, but...

Even if land in the city were free, can we construct basic apartments that would be affordable for someone making $9.50/hr? How about for someone making $30k but has student loans and rising insurance premiums and the need for a car because transit in this town is lacking? I'm all for more housing being built in the cities (and certainly housing is far more desirable than grifts like subsidized sports venues or corporate campuses) but the fundamental issue is that of poverty, and how people can live in or near poverty for generations and struggle to make rent in spite of working full time or more. Compound that with a flip in what affluent people tend to prefer (it turns out a McMansion and a 40 minute commute isn't a boon to one's quality of life?) and once again poor people suffer. They suffered when the city was hollowed out, and they're suffering once again as people realize the city is where quality of life truly exists.

Now, could the Democrats do better on that? Absolutely. But let's not pretend it all happens in a vacuum.

Supply

I agree that poverty is the fundamental issue here, as well as in just about every problem this country faces. That's a big problem to solve, especially in a country where one political party could care less about the poor. I would love to see taxes raised to pay for education, transit, housing, and the elimination of poverty. Its just not going to happen, at least anytime soon.

There is, however, an affordable solution to the housing problem that cities (and by extension, Democrats) can undertake. And that solution is simply to remove impediments to building more housing and overcome the NIMBY objections. People want to help the poor (or say they do) and address this problem, but either don't understand or are unwilling to do what it takes.

Is the market going to build basic apartments that someone making $9.50/hour can live in? Probably not. But simply building more housing is still going to help the problem. This is what happened in Boston, where rents are actually going down:

"The biggest reason for the dip in rental prices up to this point is visible on the skyline: Under Walsh’s administration, Boston has embarked on a building spree. After taking office, Walsh pledged to build 53,000 new units of housing, a goal he appears to be on track to meet. Somerville and other neighboring cities have also been adding units that help meet some of the need for new housing in the region.

Many of those new units, whether they’re condos or apartments, are too expensive for the average family. But the city believes that they’ve reduced the demand on older housing stock enough that owners of existing units have been forced to lower their prices to compete. The law of supply and demand, it would appear, is working in Boston."

https://www.bostonglobe.com/opinion/editorials/2017/05/28/boston-rents-d...

Build more housing

The reason rents here (and everywhere) are rising is because there is not enough housing supply to meet the demand. The easiest, and maybe only, fix to that problem is to build more housing.

Except that no one wants the additional housing built near them. Its the biggest NIMBY (not in my backyard) issue there is. Neighbors in Highland Park are upset because the Ford site development is too dense. The too dense, too tall, too expensive complaint comes up anytime someone tries to build something other than single family homes.

Here is a recent one:

http://www.citypages.com/news/another-upscale-apartment-project-coming-t...

One that was stopped by NIMBY opposition:

http://www.startribune.com/july-25-6-story-dinkytown-project-falters-at-...

I know people who are militant about their opposition to the Ford site, but fill their Facebook feeds with pro-immigrant, pro-DACA posts. They can't see the disconnect between supporting immigrants, but making it hard for them to afford to live anywhere. The "all are welcome here" signs really mean "all are welcome, but somewhere else not near me."

Upzoning

How does this article get written without discussing upzoning?

The framing of this entire discussion is just so far off the mark. The solutions discussed have no track record of success. Whatever one's feelings on developers and market forces, making development harder will not lower rents outside of a lucky few. What it will do is placate the forces opposed to any change in their neighborhood, and give all of us urban leftys some catharsis by taking out our frustrations on evil capitalist developers (while we work at our private sector jobs to pay for our market-rate homes which have tripled in value since we bought them, and maybe cash rent checks which are nice and big since we have no competition).

Unless someone has a plan to stop people from wanting to live in the city - a demand which will has the potential to make a real impact on climate change - people will keep coming. You can either let people build to accommodate them, or wring your hands helplessly about gentrification.

Totally agree

How can "adding more housing" not be discussed in this article? Minneapolis has a vacancy rate of less than 3 percent, and it's been there for several years. More people are moving to the city, and landlords are taking advantage by catering to those with the most money.

As long as there are so few housing options for families, landlords will continue to command high rents. We will continue to see displacement like this without more housing, and that means workings families and people of color will be pushed out on neighborhoods. If there were abundant housing, we would have landlords fighting each other for tenants, rather than the other way around.

Of course, abundant housing is prevented by a slew of city ordinances that make new construction impossible in most neighborhoods. An outdated zoning code and city ordinances which prioritize car storage over housing construction need to go if we want to grow and thrive in an equitable way.

This is a no-win situation

This is a no-win situation for the leftist leadership in large cities nationwide, but I have no sympathy for them; they did it to themselves.

20 years of subsidized living packages have had the desired effect; attract large numbers of unemployed and underemployed people to keep the Democrats in control. But that demographic brings a lot of baggage with their votes.

They've managed to foot the bill so far with increased taxes, fees and state subsidies. But the gravy train is slowing to a stop. Raise taxes, you chase away the middle income bill payers.

That leaves prime real state open for hugh end redevelopment. Once wealthy folks have a big enough investment, thereis simply no turning back. Instituting rent controls simply increases the motivation for landlords to sell their properties as condos; just look at San Francisco and NYC.

No, this is yet another mess poorly considered, leftist social engineering has wrought, and as has been proven time and again, there simply ain't enough cash to keep it afloat.

Nope

That explanation of the affordable housing situation has no basis in reality. None. Its pure fiction.

And you have it backwards - its outstate Minnesota - the areas that elect Republicans - that is being subsidized by the metro area.

A quick response from the wtier

Hello Folks,

This is the writer.

Just a quick to note to say that I want to write about the NIMBY/add more housing dynamic in another piece, though I could have mentioned that in this article, as well as a lot of other things. I ran up against limitations of time and space, but thank you for pointing that issue out and elaborating. Readers will be better for it. Upzoning is part of the equation and also needs to be discussed further.

I'd love to see more detailed explanations of where city council members and candidates stand on these and other issues when it comes to affordable housing. There is still work to do in terms of pushing the media coverage and the discussion into the weighing of policy options and figuring out who stands where. A lot of these comments are helpful in that regard as well.

Feel free to yell at me on Twitter too: @JaredGoyette.

Thanks for reading.

Jared

Please do

I look forward to reading it.

re: Mpls candidates on housing

re: your interest in explanations of where council members and candidates stand on housing/tenant rights, there is a series of 10 ward-specific candidate forums and a mayoral candidate forum taking place on these topics (two of them tonight), sponsored by the Minneapolis Make Homes Happen coalition:
https://www.facebook.com/pg/MakeHomesHappenMPLS/events/?ref=page_internal
Candidates also received housing-focused questionnaires, and the coalition is publishing those and distributing at each event (and will have them on the web too).

HUD has a budget of 50 Billion dollars.

Isn't affordable housing their mission? Rather than constantly work down towards low rent housing how about the urban politicians/leaders look upward with creating an environment that brings in more and better paying jobs?

HUD

"Isn't affordable housing their mission?" It is one part of their mission.

"Rather than constantly work down towards low rent housing how about the urban politicians/leaders look upward with creating an environment that brings in more and better paying jobs?" As in Silicon Valley? It's an area with lots of better paying jobs (2.7% unemployment vs. 3.2% Minneapolis). The median rent for a 1 bedroom apartment in San Francisco is $3590. There are more workers in that area who commute more than 50 miles each way there than anywhere else in the country.

Affordable Housing

I have been unhappy for years in my affordable apartment, which has a defective refrigerator and a landlord who used nasty chemicals to get rid of the bugs; even though I am chemically sensitive and there was another option. The landlord simply did not care. The kitchen counter space is so small that I often have to put dishes and other items on the stove while preparing a meal. We simply need to start creating more housing and keeping up what we have. We have this housing fund, but we are not creating new housing. I was happy to join these wonderful individuals in supporting and protesting against this developer. This is a ongoing problem in Minneapolis with landlords jacking up the rent sky high, remodeling apartments and then getting rid of low income people who can't pay the higher rent. This is immoral and we got to stop doing this. The vacancy rates are so low, so you can't move to a better space even if you can afford it. This something which needs to change.

NOAH Strategies Reward Slumlords

With all due respect to CM Bender, the strategy of using public funds to buy privately owned "NOAH" apartment buildings from landlords that have neglected them, which means getting into a bidding war with well-financed buyers AT THE TOP OF THE MARKET, rewards the slumlords that have neglected their properties for years. And then we'll have to invest to renovate. It will make some of us feel good, but its impact with be minimal.

I'd rather we use public money to support all types of new housing development, including market-rate housing that isn't being built by the private market in poor neighborhoods. We can't get around building more. Let's be extra strategic with our public dollars, not line the pockets of slumlords.

I am a renter who lucked into

I am a renter who lucked into a relatively low-cost, family-owned apartment. I would like to live closer to downtown, but everything near downtown is either really low-income public housing or "market-rate" housing that is for markets of people who earn at least $4500 a month, given the standard of spending no more than 1/3 of your income on housing.

Many, if not the majority, of these so-called "luxury" buildings are called that because of their completely unnecessary amenities: onsite gyms, onsite saunas, onsite swimming pools, onsite business centers, onsite party rooms with wet bars, even onsite dog parks and dog-washing stations.

Meanwhile, the apartments themselves are tiny (but do they ever have walk-in closets!) with Pullman kitchens (oh, but the tiny countertop work spaces are marble!), thin walls that let you hear your neighbor snoring, and tiny balconies held in place by two chains.

Those rip-off developments typically set you back a minimum of $1500 (plus utilities plus "pet rent" for those who have a dog or cat) a month for a one-bedroom, and there are even some buildings that charge that much for a studio.

It is worth noting that no one can build these shoddy but superficially attractive buildings without a permit. Why is the city allowing these buildings?

Someone needs to build good basic apartments without all the needless "amenities," featuring kitchens that a person can prepare a substantial meal in, living rooms and bedrooms that can take more than three pieces of furniture, soundproof walls, and (preferably screened-in) balconies that can hold more than one lawn chair.

Almost nobody is building these properties. The very few that exist have waiting lists. Yes, waiting lists. There IS a market for them.

A further problem is that developers who take tax breaks for building low-income or middle-income housing wait until the tax breaks expire, then kick out the tenants and raise the rent.

Since builders will do anything for a tax break, how about generous, non-expiring tax breaks for low- and middle-income properties? HOWEVER, under those circumstances, if the owners decided to take the building upscale, then they would have to repay ALL the taxes they didn't pay in previous years.

This would satisfy the requirements of the housing activists (more housing) and the right-wingers (building owners would have a choice but would have to pay for their choice).

The main reason I have not moved back to Portland, Oregon is that housing prices there are insane and have been for at least five years, and the people least able to afford long commutes by car are being forced to live in car-dependent communities way beyond the city. We in the Twin Cities have an opportunity to forestall this kind of problem by encouraging more low- and middle-income housing in the central cities and close-in neighborhoods.

All backwards

You say that there is a market for a certain type of development, but that builders are instead building "shoddy and superficially attractive" luxury apartments. I hate to break it to you, but what the builders design and build is based on what the market wants. Why is the city allowing these buildings, you ask? Because there is a demand for them.

A big part of the housing problem is that the city often does not allow these buildings. By opposing these developments, you are exacerbating the problem. Housing supply has been artificially constrained, and that has driven rents up. Build more housing units (of any type) and you will see rents drop.

We should try to encourage (through tax breaks, etc) builders to build lower and middle income housing. But the bad guys here aren't the builders putting up luxury apartments. Its the NIMBYs who are opposing adding more housing.

"The market" is not

"The market" is not foolproof. In real life, companies often create the "demand" they want by shutting out alternatives.

The developers are simply cashing in on the population growth in the region. A city becomes popular, and the developers rush to build overpriced luxury housing, often jacking up the rents to levels that the existing residents cannot pay. Yes, they can rent them out to the young and affluent and inexperienced (have you ever looked at who lives in those places?), but what about the rest of the population?

And way too many of those apartments ARE shoddy. Thin walls and Pullman kitchens do not constitute luxury.

I agree with

I agree with Karen. Just look at Uptown and the Greenway. Look at all the development there. Look at the high prices and the cheaply built Apartment complexes. It drives up prices in the surrounding areas far beyond the ability for most of their long time inhabitants can afford. In 10 to 20 years and those new apartments will be the newest pocket of poverty due to the shoddy construction alone. I watched them go up, I know the building materials used. These are not well build buildings. As soon as the 'new affluent' realize they can buy a house for less that the cost of the rent they pay there, they will vacate.