School leaders press legislators to invest $100 million for affordable housing

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April 23, 2014 // UPDATED 5:04 pm - April 25, 2014
By: Sarah McKenzie
Sarah McKenzie

Minneapolis Public Schools Supt. Bernadeia Johnson joined other school leaders and affordable housing advocates at the state Capitol today to call on legislators to approve $100 million in bonding for affordable housing.

The number of students in the state without housing is higher today than before the housing market collapse, according to a joint report from the progressive, nonpartisan think tank MN 2020 and the Minnesota Housing Partnership.

The report, “Uneven Recovery: A Look Back at Minnesota’s Housing Crisis,” found that while the housing market is on the mend, many renters and homeowners in the state are still struggling to find affordable housing. About 58 percent of Minnesota households with annual incomes of $50,000 or less spend more than 30 percent of their income on housing. About 12.5 percent of the state’s households are spending more than 50 percent of their salaries on housing.

North Minneapolis has experienced a slow down in foreclosures, but a halt in new construction and a tight rental market has caused a spike in rents on the North Side and throughout the city. Minneapolis rental rates increased 23 percent from 2006 to 2013, according to a figure cited in the “Uneven Recovery” report.

"It's been a real loss of wealth for a community that had less wealth to begin with," said Leigh Rosenberg, director of research and outreach for the Minnesota Housing Partnership. 

Tens of thousands of foreclosed homeowners entered the rental market after the housing market collapsed at a time when the supply of rental housing was already low in many areas throughout the state. The trend has been especially challenging for low-income families, senior citizens and people with disabilities looking for affordable places to live.

The rate of homelessness in the state, meanwhile, has been on the rise since 1991, according to information from Wilder Research referenced in the report.

More than 3,400 Minneapolis Public Schools students — 11 percent of enrolled students — have been identified as homeless this spring, said Elizabeth Hinz, the district’s liaison for homeless and highly mobile students.

“Affordable housing for families is critical for children and youth to be able to progress in school and be able contributors to their communities,” she said. “This state bonding bill for $100 million in affordable housing means housing and homes for children, youth and families that otherwise do not have homes or stable housing. The bonding funds require leveraging both public and private resources, so the real value is several times the original $100 million.” 

Johnson said homelessness is a growing problem for the school district. "It's a huge problem for Minneapolis. It's getting increasingly worse," she said. 

Some of the students are in homeless shelters, others stay with relatives or are "couch hopping" during the school year, she said. 

"When they don't feel like they have a stable home environment, I believe that has an impact on how they feel when they come into a school environment," she said. 

Once a student has been identified as homeless, school leaders match students with supportive services and make sure he or she has access to clean clothing, extra snacks and school supplies, Johnson said. 

"We do everything we can because we know we can't do it alone and we want to change outcomes and impact what happens in the classroom so we reach out to our community partners to help us," Johnson said. 

Homeless students face significant hardships in the classroom, Hinz said.

“Kids are greatly handicapped in their learning when they are anxious about where they are going to sleep, safety for themselves and their siblings and parents, having food to eat, and being too tired to realize they haven’t been able to sleep at night,” she said.

The House version of the bonding bill includes $100 million for affordable housing while Gov. Mark Dayton’s bonding bill includes $50 million. Senate leaders have yet to release a bonding proposal.

A local push for more affordable housing 

While the market remains hot for high-end rental housing in the city — particularly downtown and Uptown — affordable housing is scarce.

City Council Member Jacob Frey (Ward 3) said he’s been in talks with Community Planning and Economic Development (CPED) staff to explore new ways to encourage developers to build more housing within reach of people with lower incomes.

He said he’d like to see more mixed income housing in the city as a way to desegregate Minneapolis and help reduce the achievement gap in schools.

Frey said he supports changing city policy that requires developers to make at least 20 percent of the project’s units affordable before they can quality for a city subsidy. He’d like to lower that threshold to encourage developers to accommodate a variety of income levels.

“If every single new development project that went up had 5 or 10 percent affordable units in it, we’d put a major dent in the opportunity gap right there,” he said.

He’s also having conversations with CPED staff about requiring residential developers with any source of public money for their projects to set aside some affordable unit.

The city’s 2014 budget has about $7.7 million for the Affordable Housing Trust Fund, which helps provide gap financing for a range of projects. It typically makes up about 10 percent of the financing for an affordable housing development, according a CPED report.

Alan Arthur, president and CEO of North Loop-based nonprofit housing developer Aeon, said finding adequate sources of long-term capital is crucial for projects. He called the $100 million state bonding proposal a good first start.

“Much more needs to be done,” he said.

He pointed out that voters in Austin, Texas, recently approved $65 million in bonding for affordable housing projects in the city.

Aeon has built or renovated more than 2,000 apartments and townhomes for low-income and formerly homeless people in the Twin Cities since it was founded in 1986.

Projects often require more than a dozen funding sources with extensive compliance requirements, Arthur said.

While Aeon and other developers have been busy building new projects, the city has lost a lot of affordable housing to various market forces.

“The city doesn’t have much more affordable housing than it did in 1994,” Arthur said. “A lot of the housing that was affordable is no longer affordable.”

Hundreds of affordable units have been lost downtown, he said.

A few new projects are on the horizon, however.

Aeon is working with Westminster Presbyterian Church to create a 150-unit affordable residential development, but a location hasn’t been determined, Arthur said.

Plymouth-based Dominium is working on rehabbing the historic Pillsbury A Mill complex on the river's East Bank into 242 affordable apartments for artists. It's expected to open late 2015. 

Minneapolis-based Schafer Richardson, a residential developer behind many of the apartment projects in the North Loop, is also planning its first affordable housing development in the historic Cameron building at 756 N. 4th St.

It was built between 1909 and 1910 as warehouse designed by Minneapolis engineer Claude Allen Porter “C.A.P.” Turner, who patented the mushroom cap reinforced concrete system, according to a CPED report on the project.

Maureen Michalski, senior project manager for Schafer Richardson, said construction will start this summer on the 44-unit apartment development. It will be geared toward people with incomes at 50 to 60 percent of the Twin Cities area-median household income of $82,900.

“We’re hoping to target younger workers who work downtown,” she said.

The $11 million project is also tapping a variety of funding sources, including historic tax credits and about $400,000 from the city’s Affordable Housing Trust Fund, among other sources.

A lot of great developers are going after funding sources for affordable housing projects, she said.

“There’s a lot of need everywhere and there’s limited dollars,” she said. “The consistent struggle is competition for those dollars.”