After months of research, we below organized some question and answers on housing policy in the Twin Cities:
What is Rent Control?
Rent control is the government mandating how much rents can rise in a given year. For example, in Canadian provinces rents can only rise 5% per year for tenants.
Isn’t Rent Control illegal in Minnesota?
No. State statute bars cities from enacting rent control; however, an exemption exists that would allow rent control if a city-wide referendum is conducted. Below is the given statute:
What role does the Met Council play in housing policy?
The Met Council is, in theory, the leading housing policy leader in Minnesota. Cities in the metro area must submit comprehensive housing plans to the Met Council, outline housing and affordable housing goals. The Met Council will approve or reject the plans; if the city decides to move forward anyway, the Met Council can sue the city involved.
Some housing advocacy groups in the Twin Cities believe the Met Council is not doing all within it’s powers to promote affordable housing. We also believe this is true.
What is TIF?
TIF (Tax Increment Financing) is a tool used frequently in St. Paul to spur residential and commercial development. Essentially, the city provides funding for a development by selling bonds. The money is not paid back to the city directly; instead, the city expects the money to be made back via increased tax revenue from the development. Our issue with this financing is that is it relies on increased property tax revenue, which can increase rents and drive people out of the city.
Why is the Ford Site development so contentious?
The proposed development is contentious to different people for different reasons. Some feel the high density population (more dense than the island of Manhattan) would ruin the character of the neighborhood and cause traffic safety issues. Others feel the project was not designed to support the existing community, instead being a plan that favors the profitability of the developers. We feel that the people of Highland Park (and surrounding St. Paul communities) were not truly consulted in development of the plan. There is widespread opposition to the plan, which has been expressed at numerous public meetings, and yet no changes were ever made to the plan. Therefor, the public meetings appeared to be a farce; although public input was welcomed, the plan was never adjusted based on public input. This is not how government should work.
Our group believes the plan does not propose enough affordable housing units to meet demand in the metro. A 20% target for affordable units has been proposed by the city. On face value, this looks to be a substantial number. However, as noted above, 20% affordable units are required if TIF financing is used for a housing development. Therefore, for $200 million in city money (which belongs to the people of St. Paul, not the council members), we expect a higher number than 20%.
In addition, our group believes this development will cause in increase in property taxes and rents to nearby properties. Some of these units will no longer be affordable, so will cause a decline in affordability in this region of St. Paul.
Based on the Vacancy Rate in the Twin Cities, Wouldn’t Any Housing Alleviate the Housing Crisis?
Quick answer: not necessarily. City Planners and the Met Council believe the vacancy rate in a metro area needs to be around 5% to be a healthy housing market. However, our group believes this is too simplistic of a concept. San Francisco has a vacancy rate of 5%, higher than the Twin Cities rate of 3%. Therefore, San Francisco would technically have a healthy market, based on this metric. But San Francisco is the most unequal city in America currently, and poor residents have effectively been forced out of the city, in favor of the professional class of workers.
Our view is, therefore, that building luxury apartments, as is the current Twin Cities policy, does not alleviate the affordable housing crisis in the metro. In fact, evidence shows that luxury developments increase nearby property taxes and rents. So more affordable unit must be built to truly help in our situation.
Is there an Affordable Housing Crisis in the Twin Cities?
Is the Number of Affordable Units Increasing?
Not really. Studies have shown that the Twin Cities area has the same amount of affordable units as 20 years ago.