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Rental regs: Minneapolis should resist replicating Seattle’s extreme policy experiments

apartments
MinnPost photo by Peter Callaghan
Two City Council members have proposed new ordinances that would substantially disrupt the rental market by limiting property managers’ ability to continue to provide safe and affordable housing.

Minneapolis is a remarkable city. It has charted its own path to greatness: growing market-leading businesses, fostering world-renowned artistic expression, engaging and elevating its extraordinary first peoples, welcoming waves of new Americans into its cosmopolitan melting pot, and nurturing a spectacular greening of the urban environment. In most instances, hard work and creative leadership executed in typically humble Minnesota fashion has led to these results. But there are also painful deficiencies in this great world city: racial disparities and an affordable housing crisis.  

Current Minneapolis city leaders are focused on these challenges and, like their predecessors, are seeking substantive solutions. National attention was focused last year on the bold decision to eliminate single-family zoning as one effort to address the housing crisis and disparities. However  even that effort is being challenged in emerging research on upzoning. Unfortunately, a pattern is developing that suggests the necessary hard work and creative leadership are missing in the formation of innovative solutions that under meaningful analysis indicate a high likelihood of success.  

The latest example of this phenomenon is the “Seattlification” of rental housing regulations. Two City Council members have proposed new ordinances that would substantially disrupt the rental market by limiting property managers’ ability to continue to provide safe and affordable housing.

Well-intentioned but ill-conceived

The well-intentioned ordinances are meant to lower barriers to housing for renters with criminal histories and low credit scores, and simultaneously limit security deposits that might mitigate those risks. These ill-conceived ideas are borrowed directly from Seattle and Portland, Oregon, where policymakers are struggling with even deeper housing affordability crises, often made worse by the latest round of their own municipal lawmaking.


Instead of promoting new approaches to helping those with recent criminal histories find housing, the draft ordinance says those with felony offenses five years from sentencing, including violent and predatory offenses, would now be eligible for housing, and a denial by the property manager would subject the manager to criminal prosecution. Furthermore, the ordinance cites a recent study by Wilder Research as the basis for concluding that “many criminal histories have no significant effect on housing outcomes.” The research has minimal application to market-rate housing since the study focused on subsidized affordable housing providers with supportive social services, and the study could draw no conclusions on renters with violent and predatory offenses since they were not included in the study.

Cecil Smith
Cecil Smith
It is imperative that Minneapolis city leaders first study the results of the extreme policy experiments in Seattle and Portland before replicating them here. The widely viewed documentary “Seattle Is Dying” is cautionary for Minneapolis having already implemented many similar policies as Seattle.

Alternative solutions

What alternative solutions might exist for these leaders? Minneapolis must rapidly increase housing production through several policy initiatives that would broaden the available housing spectrum and increase supply, including permitting very affordable co-living projects. Some of these projects could include supportive services and additional building security for those making transitions after completing their criminal sentence.

Other production reforms include partnering locally in the construction revolution that is already occurring in the United States in places like California and Chicago, which also may mean easing regulations. This system reform could create 30 to 40 percent cost savings over our current model of housing production and deliver it much more rapidly. Minneapolis could also establish incentives and risk mitigation programs to encourage the private market to accept renters with challenging histories — including criminal, credit and rental histories — out of which can emerge a set of best practices as the program matures to further improve renter success.

These ideas deserve study and analysis, and they deserve further refinement and innovation. There are other solutions that also need full consideration. But the residents of Minneapolis do not deserve failing and recycled Seattle ordinances. They deserve solutions that will significantly address the shortage of affordable housing. They deserve city leaders who humbly set about the hard work and creatively lead us to policies and programs that truly solve the problems that still beset this great world city.

Cecil Smith lives in Minneapolis and serves on the Minneapolis Housing Advisory Committee. He previously served on the Governor’s Housing Task Force and as Board Chair of the Minnesota Multi Housing Association.

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Comments (23)

  1. Submitted by Pat Terry on 06/07/2019 - 09:33 am.

    The “Seattle is Dying” piece is racist propaganda put out by a Sinclair-owned (right-wing) news station that constantly bashes Seattle’s progressive political leadership. Its not a cautionary tale at all – its just false information packaged up to scare people.

    I have some concerns about the ordinances, but if this kind of dishonest tripe (extreme policy experiments!) is the opposition, then I am wholeheartedly in support.

    • Submitted by lisa miller on 06/07/2019 - 10:51 am.

      But it is true Seattle and Portland have incredible rising housing costs. I agree with some of the intentions of the bill; but also again have to say there are unintended consequences. So often people come up with bills that make them feel good, but logistically do little or muck things up. In terms of credit issues, why not encourage landlords to have people’s rent vouchered if they have the income and have poor credit history. We also can’t keep upping property taxes to the point some struggle to stay in the city/county especially seniors.

      • Submitted by Pat Terry on 06/07/2019 - 11:20 am.

        Yeah, I generally agree with that. There is an honest discussion to be had about this proposal and the issues in Seattle. But this piece, and especially the nonsense “Seattle is Dying” story referenced do not contribute to honest discussion. Maybe Minnpost can find someone to write a good faith analysis of this.

        • Submitted by Mark Kulda on 06/07/2019 - 03:58 pm.

          I’m not sure how you can say the ‘Seattle Is Dying’ documentary is racist? It’s a one hour long story by KOMO-TV in Seattle which is a highly respected news outlet. In the first 30 minutes, you see 15 homeless people either in video or interviewed and 14 of them are white. I think it is a perfectly suited example for what can happen when a city’s housing policies fail.

          • Submitted by Pat Terry on 06/07/2019 - 05:01 pm.

            Nope.

            KOMO was a respected news station until it was purchased by Sinclair and became a right-wing propaganda outlet. They now show pro-trump puff pieces on local news.

            As far as the piece, it was utter nonsense. Some of the “homeless” people in the story aren’t even homeless and were shocked to see themselves misrepresented. It has no relevance whatsoever to the city’a housing policies. It was pure fiction meant to scare people.

            • Submitted by John Reynolds on 06/08/2019 - 10:35 am.

              The Seattle Is Dying reporter has been a reporter for 25+ years, won 25 regional Emmy awards and has received the Edward R. Murrow Award for best feature. Not a hack.

      • Submitted by Matthew Steele on 06/07/2019 - 12:30 pm.

        And why do costs for things housing rise? Hint: It’s not because they’re located somewhere that’s dying.

  2. Submitted by Tom Anderson on 06/07/2019 - 10:45 am.

    Your commentary elides or misconstrues several key points:

    1. The Freemark journal article you link to regarding the limits of upzoning is not relevant. It examined only the “short-term, local-level impacts of upzoning” in small specific areas of a very large city. The Minneapolis 2040 Plan effectively upzoned city-wide, and will provide more long term certainty for developers and investors than piecemeal, ad hoc upzoning in small pockets. There will not be a gold rush to grab a handful of upzoned parcels in an otherwise constrained market. Upzoning does not solve all problems (hence the necessity for protecting renters via the ordinances you oppose), but the critique provided by the paper you link to is not applicable.

    2. You propose co-living projects with supportive services and extra security “for those making transitions after completing their criminal sentence.” The proposed ordinances do not mandate that all private rental properties become halfway houses – they simply bar landlords from disqualifying those with felony convictions over 5 years old, misdemeanors over 2 years old, and those arrested but not convicted. In what way is somebody who served 90 days for a DWI 15 years ago, or somebody who was mistakenly arrested years ago and never convicted, “making a transition” back into society? These are regular people who need regular homes, not crime lords who need close supervision.

    3. The topics of race, residential segregation, and inequities in the criminal justice system are completely absent from your commentary. People of color are disproportionately likely to be stopped, arrested, prosecuted, and convicted (and evicted) compared to white people (for a introduction to the collection of literature on the issue, see the links in this Washington Post commentary: https://tinyurl.com/y3y9l9xu). Old convictions, arrests, or evictions often serve as a proxy for race, allowing landlords to discriminate in ways that would otherwise be illegal under the Fair Housing Act, and help to maintain our city’s deeply inequitable patterns of residential segregation.

    I agree that Minneapolis needs more housing of all types, especially affordable housing. A looser rental market with higher vacancy rates would give slightly more power to renters. However, over decades and through all kinds of rental markets, Minneapolis has remained a highly segregated city. And when households can be barred from most rental properties for irrelevant, minor, and racially-disparate perceived blemishes in their history, you are left with a situation where those families are at the whim of the small submarket of landlords who will rent to them, often at inflated prices for substandard housing.

    In sum, simply appealing to parochial sentiment (“let’s not be like Failed Seattle”) is not a sufficient argument for depriving individuals and families of a place to live.

  3. Submitted by Joel Stegner on 06/07/2019 - 11:26 am.

    Pretty simple. Homelessness, particularly of children, is s very bad thing. Our status quo promotes homelessness, which in turn creates monster problems. The City is wise to look at new regulations to protect renters, given that half of city residents rent. Object to specific provisions, with facts rather than fear as your supporting evidence, but don’t pretend that we cannot place new demands on landlords, many of which don’t live in Minneapolis and see the city just as a place to make money

  4. Submitted by Matthew Steele on 06/07/2019 - 12:28 pm.

    I’m still torn on the actual policies proposed here, but I’m bothered by the way MMFHA is pushing their side. First, I keep seeing astroturf ads on social media funded by them. Second, I see them blatantly misapplying a study about upzoning in Chicago right here. Disclosure: I know the study author and had coffee with him in Minneapolis a few days ago. But the study points out that the areas which were upzoned did not see an increase in newly permitted dwellings over the study period. It’s improper to imply an increase in supply didn’t have an affect on housing affordability when there wasn’t… an increase in supply.

  5. Submitted by Michael Friedman on 06/07/2019 - 03:02 pm.

    Not sure if the headline is the author’s or Minnpost’s own summary, but one should note the excellent example provided of propaganda which defends private profit goals over reforms: “Seattle’s extreme policy experiments”

    Seattle – take a city known to run on the left side of things and present that as if it itself is a problem, thus avoiding debate

    extreme – throw in a mindless labeling that makes the reform view outside of debatable norm, thus avoiding the need for debate

    policy experiment – label the reform as if it’s some untested speculative attempt at something, whereas policies favoring wealth (tax abatements, subsidies) are implicitly (and falsely) presented not as alternative policy experiments but tried and true.

    Other commentators here have done well to address this article, which fundamentally serves small private interests over public needs, and does not have the integrity to reasonably debate.

  6. Submitted by Matt Mayotte on 06/09/2019 - 08:25 am.

    Ordinances such as this disproportionately impact landlords who own low to average priced properties and exempt the large commercial landlords. This one size fits all approach assumes that all landlords are money hungry slumlords and forces us to push the added risk and added expense down to the tenants. As a landlord I have a responsibility to my current tenants to keep them safe by not renting adjacent units to criminals. Around 30% of my tenants over the past 10 years have been bad tenants and each one has cost me a minimum of around 4000$ due to lost rent and damage to property. There are 3 things that landlords typically look at when selecting the best tenant. Those are rental history, credit, and criminal background. Rental history is like job history when applying for a job. Obviously you don’t list jobs as references if you didn’t work very hard. Its the same with housing. Tenants only list the references where they were good and paid on time. Prior credit infractions and prior criminal history are the best indicators of future problems because those are non-voluntary sources of information. Why should the landlords who are barely able to pay their mortgages be asked to fix the racial and socio-economic deficiencies in the criminal justice, law enforcement, and lending systems? This ordinance exempts all of the big multi-family property managers since their rents are too high for almost all of the people with credit issues or criminal history. The ordinance passed a couple of years ago which prohibits landlords from discriminating against section 8 voucher recipients also only impacts landlords with older buildings and cheaper rents and exempts the rich guys from having to absorb this additional risk. I am all for ending racial disparities and giving a second chance where it is warranted, but why can’t the city come up with a bonding program or rent guarantee insurance for the high risk tenants? Blanket ordinances such as this won’t help affordability. We are experiencing the negative impacts of large corporations driving down real wages for 20 years. The costs of materials and skilled labor keeps going up so housing prices will continue to rise along with rents. The only way to tackle affordable housing in the long run is to raise wages.

    • Submitted by Matt Haas on 06/10/2019 - 09:47 pm.

      So why not just eliminate the middle man and have the city buy up all these properties that you cannot be managed by landlords subject to these guidelines. Why should taxpayers subsidize your business through bonding or rent guarantees, while you keep the gains, instead of just keeping the difference for themselves. While you may not like the role being asked of you, the hard truth remains that in the absence of any sort of change in tack, the result will simply be an increasing tide of residents simply unable to find housing of any kind, and a city overwhelmed with the social costs of that reality. In essence the city will collapse under weight of catering to landlords risk management desires. Personally, I’d prefer a new stab at a revolution in the public housing idea, since despite your claims to the contrary landlords (which include those “big guys,” you so deride) ARE in general far more interested in profit than they are in the actual business of providing shelter to an increasing diverse array of city residents.

  7. Submitted by Paul Udstrand on 06/09/2019 - 01:45 pm.

    I would simply point out that Mr. Smith doesn’t actually show us how things have gone wrong in Seattle, he leaves us with no substance to work with. If the 5 year felony limit is a problem you need to show us that it’s a problem and what kind of problem it is. Are these tenants a problem of some kind for landlords and if so what kind of problem? Same thing the credit checks. Is Mr. Smith telling us that landlords has perfect tenants until this “radical” plan changed everything? That’s not a credible claim on the face of it.

    The idea that you’re going to lower building costs by 40% with deregulation is just another reference to claims made by “Housing First” derived from a garbage analysis. You can read that and look at the comments here: https://www.minnpost.com/community-voices/2019/02/housing-affordability-crisis-policymakers-must-be-deliberate-in-fixing-it/

    Sure, builders would love less regulation and whatever cost reductions come along with it, but they’ll pocket the difference, they won’t reduce housing prices.

    The idea that cities will bring housing prices down by simply encouraging more building is yet another reference to defunct but persistent supply and demand models. This has been discussed at length elsewhere so in a nutshell you can encourage building to some extent, but you can’t make builders over-build since it’s not in their best interest to drive down prices. Builders aren’t stupid, they throttle building and new construction to avoid flooding the market and reducing their profit. Builders and developers make mistakes sometimes, they choose locations poorly or fail to recognize impending market failures, but they don’t deliberately flood the market in order to drive prices down, and you can’t MAKE them do that unless you flat out subsidize them.

    It simply goes without saying that creating a system that de factor forces felons and people with low credit scores into group homes of kind is absurd for sooooo many reasons.

    • Submitted by Dennis Wagner on 06/10/2019 - 09:47 pm.

      Seems there are a fair amount of folks that don’t want them for neighbors, suspect they all have their reasons rationale or not. .

      • Submitted by Paul Udstrand on 06/11/2019 - 10:30 am.

        Dennis,

        This is why group home solutions would fail. You always have NIMBY reactions to group home settings of almost any kind.

        In normal residential settings “neighbors” don’t know the criminal records or credit scores of their fellow tenants, and unless they’re sex offenders of some kind no notification is required. People can only practice their prejudice when they identify targets of their prejudice. Very few people run background checks on their neighbors or try to run credits checks. And frankly, if someone WAS convicted of a felony 5 years ago… and their moving into the apartment next door instead of sitting in a prison cell, it couldn’t have been much of a felony in the first place.

        • Submitted by Dennis Wagner on 06/11/2019 - 07:02 pm.

          You know Paul, some places we really don’t want to go, but. The issue is not necessarily NIMBY, the issue as some folks see it is, that the social norms (and acting out of those norms) of certain folks are not quite compatible with the social norms of other folks. Meaning whether you have subsidized/low-no income housing in Mt. Curve, Lake of the isles, or Powder Horn, folks probably wouldn’t even know much less care, “but for” the real or imagined social issues that accompany the inhabitants, vs fit into the local environment expectations. So to put the shoe on the other foot, folks are complaining about “gentrification” in some of the North side neighbor hoods, for some folks that is code for, we don’t like the changing of the social/community expectations in our neighborhood. So your real question(s) is/are, can these folks mainstream, and what does mainstream look like, from this perspective depends on your neighborhood and your neighbors.

          • Submitted by Paul Udstrand on 06/13/2019 - 09:36 am.

            Dennis,

            I can’t make any sense out of your comment. Since neighbors don’t run background and credit on their neighbors they don’t know criminal and credit histories, so community “standards” aren’t an issue in this regard.

            Neighbors DO know when someone buys a property and uses it as group home, some cities actually require notification. No matter what kind group home your trying to open (and I speak as someone who as worked in several group homes) the neighbors don’t like it, and that IS if flat out NIMBYism.

            Credit histories and old criminal records aren’t violations of community standards, they’re personal and individual issues that people themselves have to contend with. We’re not talking about people who are engaged in criminal activity, or ducking out on rent. We’re talking about people who are basically indistinguishable from anyone else, and could be just a good if not a better neighbors and renters than anyone else.

            • Submitted by Dennis Wagner on 06/13/2019 - 02:08 pm.

              Pretty simple, you don’t know if the guy standing next to you is a sloppily dressed unkempt millionaire, or a contractor trying to make ends meet. End of the day, folks want folks that act similar to them, and hold similar values. You aren’t seeing the forest through the trees.

              • Submitted by Paul Udstrand on 06/14/2019 - 09:01 am.

                You still fail Dennis,

                First of all, you’re assuming your intolerance is a universal characteristic, and that conformity is always precludes diversity.

                Second, you keep assuming that someone who committed a felony five years ago, and people with poor credit scores, will “look” or behave different than everyone else, that’s a stereotype pretending to be a social norm. The point is you can’t tell whether or not the guy standing next to you- who looks just like you, is a millionaire or a homeless guy. So you’re comfort level, whatever it may be, is based on prejudice and illusion.

                • Submitted by Dennis Wagner on 06/20/2019 - 08:48 am.

                  As said, you can’t see the forest though the trees, nothing is assumed, folks actual real life behaviors/actions etc.will tell the tale. Acceptable, tolerable? Did you read the St.Cloud article? To those folks just being a different color and suspected different religion, was not tolerable, why? They fear different for very irrational reasons, to folks like me, but rationale to folks like them. . .

      • Submitted by Matt Haas on 06/11/2019 - 11:17 am.

        Unless there is some plan I’m not aware of to ship said felons and/or folks with bad credit to some deserted island somewhere, they WILL be someone’s neighbor, though. Its seems rather dubious to assign the power to decide which folks that would be to those whose motive in the decision is profit.

        • Submitted by Paul Udstrand on 06/11/2019 - 11:27 am.

          Matt, I’m sure that plan exists, I wouldn’t doubt someone in the White House is working on it as we type.

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