Rental Housing Work Group

May 7, 2018

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Agenda: Meeting #5

1:05 p.m. Review agenda and key meeting goals

1:10 p.m. Highlight recent Minnesota Housing Research

1:30 p.m. Reflect on framing language for final report

1:40 p.m. Reflect on April Task Force meeting with speaker David Smith

2:10 p.m. Discuss DRAFT Recommendations

2:55 p.m. Reminder of Survey Highlights

3:00 p.m. Discuss ideas not yet thoroughly vetted

3:45 p.m. Public comment and wrap up

4:00 p.m. Adjourn 2

Recent Minnesota Housing Research

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John Patterson will provide a brief overview of two recent

research studies:

“An Estimate of Annual Need for Rental Housing in

Minnesota 2019 through 2030

“The Loss of Naturally Occurring Affordable Housing

(NOAH)

Rental Needs Assessment

Rental Needs Assessment: Components

• Bring the rental vacancy rate up to a desirable 5% in markets across the state

• House new renter households as the state’s population increases

• Address the “supply gap” for households with incomes at or below 30% of the area median income (AMI)

• Address the “allocation gap” at 30% of AMI

Minnesota’s Need for New Rental Housing: Annual Average 8,800 Units

Minnesota’s Need for New Rental Housing: By Income Level

Estimated Supply Gaps and Surpluses in Minnesota, 2018

Household Income

Number of

Households in

Income Range

Supply of

Affordable Units in

Income Range

Supply Gap (-)

Surplus (+)

<=30% of AMI 192,000 121,500 -70,500

>30% to <=50% of AMI 131,000 244,000 113,000

>50% to <=80% of AMI 127,500 220,000 92,500

>80% of AMI 193,000 58,000 -135,000

Total 643,500 643,500 0

Note: A previous version of this table had figures from HUD’s 2010-14 CHAS data,

while this table has 2018 figures, which were projected from the 2010-14 data.

Addressing the Supply Gap at 30% of AMI with New Production

Annual Units <=30% of AMI

Address New Renters and Vacancy Rate 2,500

Address Current Supply Gap (70,500 units spread over 12 years)

5,875

Total 8,375

Estimated Allocation Gaps Surpluses in Minnesota, 2018

Allocation Gap (-)

<=30% of AMI -52,000

>30% to <=50% of AMI -108,000

>50% to <=80% of AMI -92,000

>80% of AMI N/A

Total N/A

Note: A previous version of this table had figures from HUD’s 2010-14 CHAS data,

while this table has 2018 figures, which were projected from the 2010-14 data.

NOAH Analysis

NOAH Findings

• Roughly 2,000 rental units are annually losing their affordability from sale and rehabilitation

• In Twin Cities metro:

• Minneapolis and St. Paul are losing smaller properties

• Suburbs are losing large properties (90% of lost units)

• NOAH units in higher rent communities more likely to be lost

NOAH Properties in the Metro Areas: Lost Properties and Current Properties

Framing for Task Force Report (overview)

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VISION Overarching statement of aspiration and need that sets the frame for the report

PREAMBLE / CASE STATEMENT for report

PRINCIPLES

ELEMENTS of a secure housing system

Case Statement for

each Element: - Background / Narrative

- Who is Impacted? - What's Working?

- Gaps?

RECOMMENDATIONS for each Element Strategy and Action Ideas for each Recommendation (identify actors and outcome?)

RECOMMENDATION Strategy or Action Idea

Strategy or Action Idea

Strategy or Action Idea

RECOMMENDATION Strategy or Action Idea

Strategy or Action Idea

Strategy or Action Idea

RECOMMENDATION Strategy or Action Idea

Strategy or Action Idea

Strategy or Action Idea

Report – Vision Statement – EXAMPLE

We envision a Minnesota where every person, regardless of race, income, household type or size, age, or health status has the ability to choose a home they can afford, close to school, work, and community. We can achieve this vision by expanding what works, reducing barriers, collaborating and innovating in housing.

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Report - DRAFTY Preamble / Case Statement

Minnesota’s quality of life and economic vitality is built on the foundation of a stable, resilient housing system.

Housing is a foundation for economic growth and thriving communities. Historically, a strong housing base has provided Minnesota a competitive advantage of the affordability and opportunity in our state. We have successfully attracted new businesses and workers and continue to grow, with world-class educational and economic opportunities and by being a place where people can afford to buy or rent a home.

To continue to grow, we need housing options to keep pace with employment opportunities for existing and new residents to our State.

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Report – DRAFTY Preamble / Case Statement (continued)

• Where you live is connected with every aspect of your life.

• Changing housing markets and needs have outpaced our ability to adapt.

• Now is the time to meet our housing needs and set the table for the next generation

• Meeting the varied and vital housing challenges of the future requires all of us to act.

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Improve Access

Increase Stability

Preserve What We Have

Increase Supply

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Report - REVISED “Elements” to organize recommendations

Thoughts on April Task Force guest speaker

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David has 35 years of experience with complex affordable housing transactions, programs, and policies, and a global reputation for creativity, insight, adaptive innovation, passion and problem-solving.

David Smith • Founder and CEO of Affordable Housing Institute • Chairman of Recap Real Estate

Review DRAFT Recommendations

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• Publish Statewide Biennium Projection of Need and corresponding goal to inform decision making that builds equitable access to safe, quality, stable housing for all Minnesotans.

• Create a dedicated and permanent affordable housing funding source at the State and local levels, sufficiently sized to meet the projected affordable housing production and preservation need and rental assistance need.

Review DRAFT Recommendations

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• Expand affordability through financial and non-financial mechanisms aimed at unlocking financing options, speeding up delivery of housing developments and creating cost efficiencies that improve access to housing for all Minnesotans.

• Expand rental assistance programs and maximize federal resources to meet the needs of Minnesota’s lowest income and most vulnerable renters.

• Incentivize private market owners to maintain, expand or make rental units available to those most in need (Naturally Occurring Affordable Housing) without significant increases in rent using targeted support from local and state government and private market.

Survey Highlights

Preserve naturally occurring affordable

housing 44%

Build more rental

housing 35%

29%

27%

21%

Expand the housing finance toolbox

20% Address gov’t regulations that increase development costs

Other priority* (write-in replies)

Address other factors that increase development costs

Preserve public and other gov’t

assisted housing

31%

Related to Rental Housing From a total of 1,633 responses

Engage employers in developing rental housing

Address the physical

condition of distressed rental

properties 33%

Diversify the rental housing stock by size and type

Help small landlords maintain quality

11%

12%

16%

*See next 2 slides for “other priorities”

Ideas not yet thoroughly vetted

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• Rent Income match

• Property Tax Incentives

• Rental subsidy

• Sale of public land

• TIF modifications

• Increase in density including ADUs and mixed use

• Anything else?

Public Input

• In-person comments taken

in order of sign-up

• Online comments will be

read by the moderator

• 1-3 minutes per person for

comments, depending on

the number of people

wishing to speak

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Upcoming events - Forums

5/8/2018 25

Watch the website for updates and details on the Forums. https://www.mnhousingtaskforce.com/regional-forums

Wrap Up

Visit www.mnhousingtaskforce.com for:

• past and future meeting information

• background studies and materials

• public input opportunities

• sign-up for updates

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Task Force Meeting – Tuesday, May 29, 9:00 a.m. to 2:00 p.m. at Wilder Foundation on University Av W and Lexington Pkwy

Next and final Rental Housing Work Group meeting –

Monday, June 4, 1:00 to 4:00 p.m. at MN Housing

Report - Task Force Principles

5/8/2018 27

Fair and equitable access to safe, quality, stable

housing for all families and individuals is critical for

success in education, health and economic stability, and disparities resulting from

differences in race, ethnicity, income and location must be

addressed.

Having a full range of housing choices is a fundamental

characteristic of strong and healthy

communities and an economically

prosperous Minnesota.

Effective partnerships

between public, private and non-profit sectors are

essential for healthy housing markets.

Report - Task Force Principles

5/8/2018 28

Limited public resources

should be focused on those segments of the

housing market not well-served by the

private market alone.

Housing stability for some families and individuals may require supports, like access

to job training, education, child care, transportation

and health care, which are connected to housing that is

affordable.

To be effective, solutions must have the

flexibility to meet the market realities of communities with

varying needs.