MHA logo(2)Minneapolis – The Minnesota Multi-Housing Association is introducing a framework to preserve and develop affordable rental housing throughout Minnesota.

Today, the organization released strategies that will be key to reaching those optimistic, yet achievable goals. These strategies are meant as a framework for a discussion to improve affordable housing in Minnesota.

The framework has three key goals:

  1. Protecting Residents
  2. Preserving Naturally Occurring Affordable Housing (NOAH)
  3. Producing More Multifamily Housing

Protecting Residents

Eviction is a worst-case scenario for everyone involved. For landlords, it’s a costly and time-consuming process, as is finding and screening new tenants to replace those lost. It’s costly for government agencies and private organizations who step in to help the displaced residents. And, above all, it’s costly to those who find themselves in need of shelter. Reasonable efforts to keep residents in their homes benefit all of the parties.

Short-term strategies

  • Streamline approval of county Emergency Assistance funds
  • Continue best practices adoption by housing assistance programs
  • Housing counselor/resident education training
  • Voluntary pre-eviction mediation
  • Expand resident rental assistance at the local level

Mid-term strategies

  • Develop pilot project for household financial emergency stabilization funds
  • Resident relocation, including time and/or assistance, under certain limited circumstances

Long-term strategies

  • More economic development and stimulus leading to better paying jobs, including affordable education opportunities and workforce readiness training, with a focus on the housing sector
  • New pathways and incentives for affordable home ownership

Preserving Naturally-Occurring Affordable Housing (NOAH)*

One of the most cost effective means of providing affordable multifamily housing is through the preservation of existing naturally-occurring affordable housing stock. This also helps to stabilize residents of communities who are at the greatest risk of dislocation.

Short-term strategies

  • Expand use of 4d tax classification with reasonable regulations
  • Low cost debt and/or equity sources for loans and grants for rehab, only for preserving affordable housing
  • Streamline approval of non-conforming units
  • Expand 40% rebate programs for energy upgrades
  • Funding for NOAH acquisitions by mission-driven partners (Greater MN Housing Fund – NOAH Impact Fund)

Mid-term strategy

  • Reduced utility rates

Long-term strategy

  • Equal property tax treatment for homeowners and rental housing residents

Producing More Multifamily Housing

Changing demographics and the strong economy have created an unprecedented demand for rental housing. Meeting this increased demand for housing has put a tremendous strain on the market. While there are numerous high-end units being built, due to a number of factors including the high construction costs and regulatory burdens, there has been insufficient production of new, affordable units. This imbalance between supply and demand has been felt most by lower income populations seeking a place to live. An increase in the supply of housing units is one component of solving this problem, and is a critical element in meeting housing needs.

Short & mid-term strategies

  • Promote lower-cost design and construction of apartments by shortening the funding and approval process and reducing costs and fees
  • Expand use of 4d tax classification for new unsubsidized affordable housing

Long-term strategies

  • Sales tax exemption for new affordable and rehab construction materials
  • Dedicated state funding source for affordable housing
  • Homegrown Fund initiative for metro-wide affordable housing funding via sales tax (Minnesota Housing Partnership Proposal)

 

*The contractual agreements for NOAH and “tax credit-free” or “government grant-free” new construction of affordable housing would have time frames commensurate with the level of government support and would be annually self-certified, but subject to audit and claw backs for violations. Limited compliance activity is essential to incentivize market-rate housing providers’ participation.

As an observation, subsidized affordable housing would also benefit from all the aforementioned strategies to lower the cost of construction.