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Affordable housing update: You’re right, we need better zoning

MinnPost photo by Greta Kaul
High-rise apartments being constructed in northeast Minneapolis.

The best thing about housing policy, the subject my business specializes in, is that everybody gets why it matters. There have been more than 100 official public meetings to discuss Minneapolis 2040, the city’s comprehensive development plan. People from every part of the city took the time to submit 10,000 comments.

The conversations we’re having around development aren’t always polite, but they’re always productive. The more we talk about the kind of development we want, the more likely it is that we’ll build the city we want to live in.

This past June I wrote a commentary published here on MinnPost that proposed a radical solution to the affordable-housing crisis. Rather than upzoning the city to encourage affordability, as Minneapolis 2040 aims to do, I urged municipal leaders to grant variances conditionally, forcing developers to build more affordable units. “Don’t change old zoning,” I argued; “instead, burn it as fuel to drive a more affordable future for everybody.”

MinnPost readers, on and offline, responded quickly.

Understandable, but not sustainable

Some homeowners, predictably, bristled at the suggestion that Minneapolis should allow any more density. (I live in south Minneapolis, and my block is thick with yard signs.) This view is understandable, but not sustainable. If we’re going to have almost half a million people in Minneapolis by 2040, we have to figure out where all our new neighbors will live — and “not in my backyard” isn’t a realistic response. It’s also the opposite of “Minnesota nice.”

Other readers pointed out that granting ad-hoc variances won’t solve the underlying problem of outdated, exclusionary city planning. “Zoning, just like a budget, is a moral document that communicates our values,” wrote reader Janne Flisrand. More affordable development will only be possible, she argued, when there’s a clear, predictable legal and moral framework for it.

You know what? I think Janne is right.

I’m an entrepreneur. I want to see results quickly, and hacking existing systems is often the most efficient way to get things done. Using zoning variances as leverage seemed like the best way to make Minneapolis more welcoming to more people, as fast as possible. Debating and litigating a more equitable zoning code would take years, when the city could implement affordability variances today. Janne’s argument has convinced me that “burning zoning for fuel” isn’t the best solution to the long-term problem of affordability.

But a purely voluntary approach to increased density won’t solve the problem, either.

Simply building more won’t make it more affordable

Building more dense housing near transit corridors, and fourplexes everywhere, as Minneapolis 2040 is proposing, would modestly increase the supply of housing in our city. That’s a good thing. Some economists argue that simply building more housing will automatically make it more affordable. But as someone who talks to developers of both affordable and luxury housing every day, I can tell you that’s just not true. Minneapolis’ planning director, Heather Worthington, agrees: The most common misunderstanding about the city’s comprehensive plan, she told MinnPost, is that “density … will equal affordability. We have not said that, we don’t believe that, we know that’s not the case.”

Chris Voss

That’s because almost everybody needs a place to live here, not wherever it’s cheapest. We’ll pay whatever we have to pay to stay near work and family. That’s why increasing the supply of apartments by itself won’t do anything to ensure that they’re affordable. As long as Minneapolis continues to be a desirable place for affluent people to live, housing will be as unaffordable as ever — no matter how much of it we build.

Lisa Bender’s inclusionary zoning proposal is the best solution to the problem I can think of — now that Janne and others have set me straight. Developers will claim that including affordable units in market-rate buildings will break the economics of new development. But I think the city would be wise to call their bluff.

Look, I love Minneapolis. I’m raising my kids here. I’m moving my business into a beloved landmark in Lyn-Lake — and the business we do is dedicated to increasing the availability of affordable housing nationwide, starting here at home. I want everybody to have the opportunity to live and work in Minneapolis as happily and successfully as I do.

Chris Voss is founder and CEO of RightSource Compliance, a Minneapolis affordable-housing consultancy.

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Comments (11)

  1. Submitted by Pat Terry on 08/31/2018 - 10:14 am.

    This guy still has it wrong.

    His premise that simply building more won’t make it more affordable is false. Housing costs are driven by supply and demand and where the increase in the demand exceeds the supply added (as has happened here) prices rise. The vacancy rate is very low, so its a seller’s/landord’s market. Places that have added a lot of housing in recent years to combat the problem have seen housing costs level off and start to fall.

    Minnpost has now published two different opinions on the same topic by this guy. Maybe you should find someone who has at least a basic understanding of economics, and maybe even someone looks at housing data and doesn’t just rely on anecdotes, to write about housing policy.

    • Submitted by Connie Sullivan on 08/31/2018 - 11:53 am.

      It’s reasonable to suggest a compromise, as this essay does. It’s worth thinking about, even if pro-upzoning folks get angry when they see compromise of their blanket policy preference.

      This writer comes at the issue from an affordable-housing perspective, respecting the market’s ability to respond to incentives. Forcing developers to consider incentives to do the right thing? Let’s talk about it, rather than dismiss the idea out of hand.

      • Submitted by Pat Terry on 08/31/2018 - 01:19 pm.

        The perspective of this writer is not of affordable housing. Ir compromise. It is a perspective of ignorance. Of presenting false information. He absolutely should be dismissed out of hand.

        I am all for incentives to get developers to include affordable units. The problem is mandating requirements that affordable units. That will actually discourage new develolment and make the problem worse. This is actually discussed re: Portland’s experience in the Minnpost article linked in the article.

        • Submitted by Paul Udstrand on 09/02/2018 - 10:43 am.

          You don’t solve problems by compromising with magical thinking. Sure, housing price go up and down here and there but the simplistic notion that unfettered markets that grant developers permission to build whatever they want wherever they want will create “affordable” housing is irrational and unsupported by history or experience. Sure, building “booms” eventually go “bust”, but that’s not a plan to create affordable housing. Even the last major nationwide “bust” didn’t give us affordable housing, it left us with millions of vacant and abandoned properties and unfinished developments, but it didn’t solve the affordable housing crises.

          There’s absolutely nothing controversial about Mr. Voss’s observations although they may not align with certain long discredited neoliberal “market” assumptions.

  2. Submitted by Joe Musich on 08/31/2018 - 12:43 pm.

    Until there are forced floors and ceilings on both rent and barrowing for homes, condos or apartments we will be stuck. And tie all the other infrastructure will we are at it like school availability, shopping choices libraries and parks, trasportation routes to jobs., etc. Not just one of the factors alone can be managed and expect the kind of result almost everyone wants yard sign or not.

  3. Submitted by Paul Udstrand on 08/31/2018 - 02:52 pm.

    Mr. Voss is correct. We won’t build our way into more affordable housing because the “law” of supply and demand that model is based on simply function. You can double down on the magic if you want but the truth it that once housing prices start dropping in a given location, developers will stop building there and move somewhere where they think they can get the prices they want. Meanwhile, prices rise around existing development.

    My only other observation is simply the density assumption that MPLS is going to see a population of 500k, and THAT’S what we should be planning for. I don’t see any reason to make that assumption. I don’t know why anyone would claim that it’s an ideal level of “density”, or why we would assume that MPLS can or will or should absorb so much of the future population growth.

  4. Submitted by Tom Goldstein on 09/01/2018 - 04:29 pm.

    Regardless of whether one agrees with the writer’s perspectives or revised viewpoint, the comment that affordable housing is simply a product of supply and demand is naive. In many cases, building more housing will not create more affordable housing unless it is price controlled. Why? Because most market rate housing is targeting the same niche–upwardly mobile 20- and 30-year-old professionals with discretionary income to afford $1200-1500 per month. Or retirees looking to downsize. Right now there are enough of those people in the market that it remains lucrative for developers to keep putting up these projects. However, at some point that market will become saturated and developers will look for other lucrative opportunities.

    It’s possible that when the market gets overbuilt, some of those projects will become more affordable, but rents will only come down if owners are desperate. That’s not a planning strategy. As more projects are built, there will be a lot more housing activity in a particular market niche, i.e., people selling homes to downsize or renters vacating their current home to move into a new project. But that doesn’t mean rents will come down.

    Unfortunately, many citizen density advocates keep thinking that more housing supply will lead to lower rents, when the reality is that a $1500/month apartment won’t magically become a $1000/month unit unless the economy slows down dramatically. There are too few nonprofit housing developers willing to target low income communities and too few housing credits available to for profit developers that will encourage them to set aside more than a token amount of affordable units. Housing supply will certainly increase in the next several years but we will be having the same discussion about “affordability” until cities get serious about funding housing instead of other big ticket items.

    • Submitted by Dan Landherr on 09/04/2018 - 09:22 am.

      Building more housing is not sufficient but it is necessary. The new $1500 rent apartments become attractive and the older apartments will become cheaper. This article in the PiPress says the nonprofits are having an easier time rehabbing older properties as affordable housing than trying to build new https://www.twincities.com/2018/08/31/new-housing-vs-used-nonprofits-try-new-tactic-in-affordability-wars/

      A focus on total cost of ownership with improved transit will also be important. If I don’t need a car I can afford more in rent.

      • Submitted by Paul Udstrand on 09/05/2018 - 10:47 am.

        “The new $1500 rent apartments become attractive and the older apartments will become cheaper.”

        No, that’s not what’s happening, prices are up, period.

        As for rehabbing old vs. building new… that’s a no brainer and I’m surprised it took nonprofits THIS long to figure it out.

        I don’t think anyone is saying we should stop building new housing, or that new housing is unnecessary. But it’s important to remember that this is market who’s function and participants are about making money, not solving community problems.

      • Submitted by Paul Udstrand on 09/05/2018 - 11:06 am.

        And… making it possible for low income people to put even MORE of their income into their housing isn’t a sustainable objective. Taking money out of their transportation budget and putting into their housing budget is just moving deck chairs. The goal has to be either to raise income levels, OR lower housing costs.

  5. Submitted by Dennis Wagner on 09/05/2018 - 02:55 pm.

    Amazing, amazing, where is low income housing being built today? In low income neighborhoods with non-profit $. And where do we think low income housing is going to be built tomorrow the same place it is today! For profit folks are not in the business to not make money, and the city is not in the business of taking high tax neighborhoods and piss–g those tax payers off with low income housing that drives their housing prices down, disturb their socioeconomic environment, and reduce the overall tax revenue from those neighborhoods. where would they get the taxes to subsidize the low income neighborhoods, and sell those lots to Habitat for Humanity etc for $1, after getting them on tax foreclosure and spending $8-10K to have the dilapidated house torn down? Reality as it exists today, seems some folks really do live in an alternate reality.
    !

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