Housing City Council Study Session April 26, 2018 1 Agenda 1. - - PowerPoint PPT Presentation

CITY OF MINNEAPOLIS

Housing City Council Study Session

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April 26, 2018

1. Key trends around affordability, stability and quality 2. Levers to impact housing

1. Lever Focus 1: Financing 2. Lever Focus 2: Regulating

Agenda

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1. The City is growing faster than it has since 1950, and the population of color is growing faster than the population as a whole 2. Minneapolis is now a majority renter population; most people of color are renters while white residents are more likely to own instead of rent 3. Minneapolis renters are facing increasing housing costs with decreasing incomes 4. Minneapolis has less affordable housing than it did 15 years ago, and production is not keeping pace with loss 5. The majority of cost-burdened households have income <50% of AMI 6. Cost-burdened households are disproportionately communities of color 7. The energy cost burden is also disproportionately high for low-income and households of color 8. Housing stability is a major concern for communities of color, as evictions disproportionately impact these neighborhoods 9. Historic discriminatory housing policies have had a lasting impact on development patterns 10. Challenged rental housing stock subjects residents to worse housing conditions and management practices 11. Disparities in housing quality have serious health impacts for residents – especially for children

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Housing trends summary

The City is growing faster than it has since 1950, and the population of color is growing faster than the population as a whole

• In 1990, around 2 in 10 residents indicated a race other than White, non-Hispanic. As of 2010 this

number had increased to 4 in 10, and is projected to grow

368,383 382,618 382,578 82,974 143,538 151,928

1990 2000 2010

Total population Of Color

Total Population and Population of Color, Minneapolis 2000 - 2010

Source: U.S. Census Bureau, Decennial Census, Metropolitan Council

521,718 459,200

100,000 200,000 300,000 400,000 500,000 600,000

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Total Population for Minneapolis, 1920-2010; Projected Population for Minneapolis, 2020-2040 Historical High 4

Minneapolis is now a majority renter population; most people of color are renters while white residents are more likely to own instead of rent

• Renter occupied units have had the larger share since 2010, and renter households are growing faster

than owner households

• White households are the only households in which the majority are owner-occupied
• There are more than 85,000 renter households in Minneapolis – nearly 40,000 are headed by a person of

Color

83,408 82,579 80,777 78,944 74,047 88,529 2000 2007 2014 Owner HH Renter HH

47.4% Tenure (Owner/Renter Status) for Minneapolis, 2000-2014 52.3%

Source: U.S. Census Bureau, American Community Survey 1-year estimates 20.7% 20.5% 31.1% 28.2% 24.3% 59.3% 79.3% 79.5% 68.9% 71.8% 75.7% 40.7% % of racial group who rent % of racial group who own

Owner/Renter Status by Racial Group for Minneapolis, 2010-2014

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Minneapolis renters are facing increasing housing costs with decreasing incomes

• Owner households as a group are largely better off than in 2000, with increasing incomes and stabilized

housing costs

• Compared with those who were renting in 2000, today’s renters face reduced incomes and increasing

rents

11%

• 14%

0% 11%

Owner Renter

Income Housing Costs % Change in Median Income and Median Housing Costs by Owner/Renter Status, Minneapolis, 2000 - 2014

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Source: U.S. Census Bureau, American Community Survey 1-year estimates

• Despite the City producing or preserving 8,900 housing units affordable at 50% of AMI, units affordable at

that income level have decreased dramatically

• In 2015, the City of Minneapolis had about 15,000 fewer housing units affordable at 50% of AMI or below

than it did in 2000

• The City has about 9,500 fewer affordable rental units than it did in 2000. More than 6 in 10 of previously

affordable units in Minneapolis were rentals

Source: U.S. Census Bureau/HUD; Comprehensive Housing Affordability Strategy 2009-2013 5-year estimates, Metropolitan Council Housing Affordability Estimates, 2014

50% 38% 50% 62% 2000 2009-2013

Unaffordable at 50% of AMI Affordable at 50% of AMI Share of Housing Stock (Owner & Renter) Affordable at 50% of AMI Decreased affordability

About 171,660 total housing units

50% of AMI for a family of four was $45,300 in 2015

About 168,700 total housing units

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Minneapolis has less affordable housing than it did 15 years ago, and production is not keeping pace with loss

• A household is:
• Cost burdened if 30% or more
• f household income is spent
• n housing
• Severely cost burdened if 50%
• r more of household income is

spent on housing

• Renters represent about 3 out of 4

cost burdened and severely cost burdened households

• Home ownership reduces the

likelihood of cost burden for most groups

*Housing Urban Development Area Median Family Income Source: 2009-2013 HUD Comprehensive Housing Affordability Strategy estimates 4,990 5,300 2,950 4,935 24,100 10,065 3,660 445 < 30% of HAMFI 30% < 50% of HAMFI 80% < 100% of HAMFI >100% of HAMFI Owner Renter

Number of cost burdened households by income group by

• wner renter status

Minneapolis, 2009-2013

82% 71% 27% 10% 77% 69% 49% 3% < 30% of HAMFI 30% < 50% of HAMFI 80% < 100% of HAMFI >100% of HAMFI Owner Renter

Share of income group that is cost burdened by owner renter status Minneapolis, 2009-2013 8

The majority of cost-burdened households have income <50% of AMI

• 45% of Black owners are cost burdened compared with 27% of White owners
• About 1 in 2 American Indian households are cost burdened regardless of tenure

Source: 2009-2013 HUD Comprehensive Housing Affordability Strategy estimates 45% 47% 31% 33% 32% 27% 59% 48% 52% 48% 48% 40% Black or African- American American Indian or Alaska Native

• ther (including

multiple races) Hispanic Asian White

Owner Renter

Share of racial group that is cost burdened by owner renter status Minneapolis, 2009-2013

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Cost-burdened households are disproportionately communities of color

Median Household, 2.32% Low-Income Households, 5.11% African-American Households, 4.14% Latino Households, 3.14% Median Household Low-Income Households African-American Households Latino Households 10

The energy cost burden is also disproportionately high for low-income and households of color

Source: American Council for an Energy-Efficient Economy

Median Energy Costs by Household Type

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• Nearly half of renter households in

North Minneapolis experienced a filing in the past 3 years

• 2/3 of cases end with tenant

displacement

Housing stability is a major concern for communities

• f color, as evictions disproportionately impact these

neighborhoods

Racial Covenants in Minneapolis

Racially restrictive covenants found No racially restrictive covenants found

• Examples of discriminatory housing policies

include:

• FHA underwriting procedures
• Racially restrictive covenants use in

Minneapolis from 1910 to 1968

• Redlining, discriminatory lending practices
• Zoning restrictions
• Limited access to GI bill
• I-94 construction and displacement
• These development patterns continue to have

lasting effects

• Areas of historic racial covenants are still

primarily white today

• Neighborhoods with more than 70% of

housing units are single family

• Areas where current zoning allows for

multifamily

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Historic discriminatory housing policies have had a lasting impact on development patterns

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Source: Minneapolis Regulatory Services Department

Tier 2 & 3 Rental Licensed Properties by Ward

Tier Description

Tier 1 Well-maintained, managed, meet minimum housing code, use very few City services Tier 2 Maintained to minimum housing code and use some City services Tier 3 Poorly maintained or managed and require excessive City services

Nearly half of Tier 2 and Tier 3 properties are located in Wards 4 and 5. 41% of Tier 2 and Tier 3 units are located in Wards 3, 9 and 10.

These effects are present in housing tiers – challenged rental housing stock subjects residents to worse housing conditions and management practices

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1 child 2-4 children 5-9 children 10-19 children 20-29 children 30+ children Source: Minneapolis Health Department

Housing disparities have serious health impacts for residents – especially for children

Minneapolis City Blocks where Children under Six Years Old were Poisoned by Lead, 1999-2014

Agenda

1. Key trends around affordability, stability and quality 2. Levers to impact housing

1. Lever Focus 1: Financing 2. Lever Focus 2: Regulating

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Fair Housing Overview

Affirmatively Further Fair Housing - The duty to Affirmatively Further Fair Housing: “taking meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to

• pportunity based on protected characteristics”

This means actions that:

• Address disparities in housing need and access to opportunity
• Replace segregated living patterns with integrated and balanced

living patterns

• Improve access to opportunity in areas of concentrated poverty

where a majority of residents are people of color

• Foster and maintain compliance with civil rights and fair housing

laws

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Certifying that the City Affirmatively Furthers Fair Housing

• City certifies that it Affirmatively Furthers Fair Housing
• What this means:
• Conduct fair housing assessments/analyses
• Take meaningful action to overcome the fair housing barriers

identified

• Housing finance and community development tools
• City wide coordination: comprehensive plan, planning and zoning,

city investments, etc.; re: impact of policies, programs, and investment on fair housing choice

• Coordination with other agencies: MPHA, Hennepin County,

Minneapolis Public Schools, Metropolitan Council, etc.

• Expectation of robust community engagement

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Source: www.ramseycounty.us/FHIC

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673 330 391 593 463 327 947 470 210 343 751 630 140 158 194 140 39 75 743 159 170 191 811 881

813 488 585 733 502 402 1690 629 380 534 1562 1511 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 50% - 80% AMI <50% AMI Source: Minneapolis Community Planning and Economic Development

Lever Focus 1: Financing The City has tools to finance affordable housing production and preservation

CPED Affordable Housing Production and Preservation in Units, 2006-2017

• Low Income Housing Tax Credits
• Affordable Housing Trust Fund
• Tax Exempt Bonds
• Tax Increment Financing (TIF)

Lever: Financing Rental Housing

• Minneapolis Homes
• Down payment assistance
• Homeownership Works

Lever: Financing Housing Ownership

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Lever Focus 1: Financing A number of challenges exist around financing affordable housing

 Competition for development sites  Scarcity of funding resources. City funding is gap funding; need to assemble 3-12 or more sources of funding  More subsidy, including rental/operating subsidies, needed to serve 30% AMI  Cost containment

Lever Focus 1: Financing While property taxes are one way to expand the financing pool, they won’t solve the problem alone

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Fund affordable housing initiatives through increasing the levy and generating additional property tax revenues Decrease affordability, increasing the property tax burden on all – including those on the edge of cost- burdened

Lever Focus 1: Financing The City has an important but limited role in financing affordable housing

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State

• Minnesota Housing Finance Agency
• Minnesota Department of Employment and

Economic Development

• Minnesota Management and Budget
• Department of Human Services

Local

• City of Minneapolis
• Minnesota Public Housing Authority
• Metropolitan Council

County

• Hennepin County Coordinated Entry
• Supportive services
• Emergency programs
• Affordable Housing Incentive Fund/Transit

Oriented Development

• Environmental Response Program

Private

• Non-profit/for-profit developers
• Property owners
• Investors
• Lenders

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Lever Focus 2: Regulating The City regulates housing conditions, but does not control all standards

• The Housing Maintenance

Code is the City’s tool to enforce housing conditions

• Quality often includes a

broader discussion including the following elements:

• A measure of safety
• Aesthetics
• Resiliency
• Overall livability

experience

Source: Minneapolis Regulatory Services Department

1202 794 676 518 343 85 14 200 400 600 800 1000 1200 1400

Total Housing Violations by Category, Last 500 Inspections

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Benefits around updating code

 Higher minimum standards  Increased longevity of housing – less deferred maintenance  More protections for tenants  Improved livability conditions

Challenges around updating code

 Increased cost for owners  Possible cost shift to tenants  Increased number of code violations  Increased citations for non-compliance  Increased quantity of inspections  May not close the gap with health-based standards.

Lever Focus 2: Regulating Changing code could improve housing conditions, but could also present challenges

• The City cannot adopt codes or

requirements that are more stringent than the State building or fire codes

• But, the City has the authority to

change the Housing Maintenance Code with some limitations

Lever: The City can update the Housing Maintenance Code

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Lever Focus 2: Regulating The City of Minneapolis also has authority using the Zoning ordinance and the Land Use policy

• Proposes land use and built form

policy that supports increased supply, location and types of housing

• Proposes increased predictability

and clarity in land use policy which will translate to more clarity and predictability in the development review process

• Land use and zoning shape

access to housing including the

• verall supply, locations and

types of housing allowed Lever: The City is required to update its Zoning Ordinance

APPENDIX

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$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000

2011 2012 2013 2014 2015 2016 2017 2018*

City of Minneapolis Affordable Housing Trust Fund Sources, 2011-2018

General Fund Development Funds Tax Increment HOME CDBG

Affordable Housing Trust Fund sources

Source: Minneapolis Community Planning and Economic Development Department

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• Conditions and management practices in rental

properties improved overall between 2016 and 2017:

• 1,399 properties lowered their tier (got better)
• 942 properties increased their tier (got worse)

4 26 25 56 138 67 9 25 201 220 49 43 79 22 40 23 97 156 92 22 70 307 316 69 74 111

Ward 13 Ward 12 Ward 11 Ward 10 Ward 9 Ward 8 Ward 7 Ward 6 Ward 5 Ward 4 Ward 3 Ward 2 Ward 1

Rental License Tier Changes, Higher or Lower Tier

Higher Tier Property Lower Tier Property

Rental license tier changes, 2016-2017

Understanding the change in tiered properties over time provides insight into livability

Source: Minneapolis Regulatory Services Department

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10 40 36 71 246 111 11 65 432 477 96 102 151 45 98 275 979 1,034 423 582 625 930 690 1,258 618 440

Ward 13 Ward 12 Ward 11 Ward 10 Ward 9 Ward 8 Ward 7 Ward 6 Ward 5 Ward 4 Ward 3 Ward 2 Ward 1

Units Properties

Properties and Units with Tier 2 and Tier 3 Rental Licenses

Tier 2 and Tier 3 Rental Licenses by Ward

Source: Minneapolis Regulatory Services Department

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Source: Minneapolis Regulatory Services Department

4.1 2.8 0.9 2 1.7 1.4 2 3 5.3 4.4 2.5 2 3.6

Ward 13 Ward 12 Ward 11 Ward 10 Ward 9 Ward 8 Ward 7 Ward 6 Ward 5 Ward 4 Ward 3 Ward 2 Ward 1

Re-inspections per 100 Rental Properties, 2017

Re-inspections for rental licensed properties

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2,135 1,573 1,587 1,562 1,339 1,411 1,594 1,341 1,021 1,018 752 907 884 813 827 737 634 847

500 1000 1500 2000 2500 3000 3500 2009 2010 2011 2012 2013 2014 2015 2016 2017

New Rental Licenses, 2009-2017

Change of Ownership Conversion

Source: Minneapolis Regulatory Services Department

New rental licenses

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Violation Category Types of Violations What could it look like?

Exterior

• Repair walls, foundation, handrails, steps, guardrails, steps, stairs,

doors

• Provide doors, screens, fence
• Paint garage, shed, fence, exterior of home
• Remove brush, trees, groundcover, yard waste
• Secure garage
• A property with damaged doors, ripped

screens, severely cracked or damaged siding with a fallen tree in the yard

Heat-Related

• Repair, replace, service heating equipment/HVAC system
• Provide temporary heat
• Provide for 65 degrees
• Heating system at a property is not working,

the temperature inside the unit is less than 65 degrees and a temporary heater has not been provided to the tenants

Interior

• Exterminate pests
• Repair appliances, walls, ceilings, handrails, windows, doors, floors,

interior surfaces

• Clean unit
• Provide, repair or replace deadbolts, locks, window exits
• A property with rodent infestation, large holes

in the interior walls, windows that won't stay

• pen and missing bedroom door knobs

Life safety

• Provide, repair or replace smoke detector, carbon monoxide detector,

fire extinguisher

• Repair or replace fire doors, fire exit
• Illegal or unlawful occupancy of a room or space
• A property without functioning smoke
• detectors. Tenants are using spaces in the

building as bedrooms that are too small and without proper egress

Miscellaneous

• Dwelling, garage or structure open to trespass
• Demolition of structure
• A property with unsecured openings through

which persons may enter, creating

• pportunities for human trafficking, loitering,
• r criminal activity

Renting without a license

• Obtain rental license
• Update rental license contact information
• Post rental license or 311 poster
• A property does not have a valid rental license

and has not posted the Who to Call poster

Utilities and zoning

• Provide, repair or replace faucets, fixtures, faceplates, wiring, gas

lines, plumbing, water heater

• Restore water pressure, hot water, water service
• Repair or provide parking surfaces
• Discontinue illegal repair of, parking or storage of vehicles
• A property does not have functioning utilities

and the unpaved lot is storing excessive vehicles

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Housing violation categories

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Housing violations by ward

107 236 129 170 316 217 53 97 615 801 255 183 308

1000 2000 3000

Ward 13 Ward 12 Ward 11 Ward 10 Ward 9 Ward 8 Ward 7 Ward 6 Ward 5 Ward 4 Ward 3 Ward 2 Ward 1

Number of Violations Issued from Founded Service Requests for Properties with 1-3 Units, 2015-2017

Exterior Heat-related Interior Life Safety Miscellaneous Renting without a license Utilities and Zoning