Minneapolis grapples with affordable housing shortage

MINNEAPOLIS — When this city became the first in the country to eliminate single-family zoning last year, the goal was to encourage developers to build denser housing in neighborhoods. But new construction is often unaffordable for lower-income residents.

The big picture: Minneapolis is growing faster than it has at any point in time since 1950, but its housing supply isn’t keeping pace.

• “We've so under-built because of the 2008 housing crisis that we would have to build 50% more housing than we’re building today for the next 10 years to keep up,” said Brad Hewitt, chair of Itasca Project, a private civic organization.

Yes, but: To get a return on their investment, developers tend to build high-end complexes that price out low- and middle-income buyers who face the biggest shortage of housing options.

So Minneapolis officials are looking at rehabilitating existing homes to maintain lower prices.

• "Preservation is key," said Minnesota State Senator Kari Dziedzic, speaking at an Axios Expert Voices event this week. "We’re not replacing affordable units at the rate they're flipping over, and we can't build our way out of that problem."
• "The question is, where does that money come from? It's not the sexy, new-building money."

Federal funding for public housing has been shrinking. Minnesota’s current supply of public housing will need hundreds of millions of dollars in rehabilitation over the next decade, according to local housing officials. And a number federal grants supporting affordable housing around the state are set to expire.

• "We're about to have a tsunami of a challenge," said Anne Mavity, Executive Director of Minnesota Housing Partnership.

Background: Eliminating single-family zoning was in part intended to erase a practice perpetuating racial segregation. Due to the zoning restrictions and a history of discriminatory lending practices, homeowners in the city are largely white.

• Now, the share of affordable housing units continues to dwindle and homeownership — a primary way to build wealth — stays out of reach for many people of color.
• By the numbers: In 1995, 31% of African Americans were homeowners in Minneapolis. By 2005, that had slipped to 29%, and in 2015 only 23% were homeowners, said Jeff Washburne, Executive Director of the City of Lakes Community Land Trust.

“What’s happening now is we can’t develop anywhere close to the affordability levels to serve, specifically, households of color,” Washburne said. "We've lost a ton of ground."