Affordable housing 101

There is a rule of thumb that says your housing costs—whether you’re a pauper or a plutocrat—should not exceed 30 percent of your income. That’s the simple part of the definition of affordable housing. Beyond that, things get more complicated.

Affordable housing is in the news these days in the Bugle area, as residential building of all kinds is increasing along the Green Line on University Avenue and several new housing projects have been proposed in north St. Anthony Park, at least one of which will be ready for occupancy in 2016. Some of these projects will include affordable housing units that have reduced rates for those making less than median incomes.

When it comes to housing, however, “affordable” isn’t just a synonym for “low-cost.”

Neil Reardon of Urbanworks Architecture, the firm responsible for the proposed “micro-unit” complex to be located in behind Carleton Lofts at University Avenue and Carleton Place, emphasized that his will be a market-rate project. Rents for the units will average around $800, less than the typical cost for the area, but that is because the apartments themselves will run between 350 to 400 square feet in size, far below the norm for even the smallest conventional apartment.

What defines “affordable”?

Housing must meet strict legal definitions set by the federal and state government to qualify for subsidized rents, according to Patty Lilledahl, director of housing for the City of St. Paul. The definition of who is eligible for affordable housing depends to a great extent on the financial underpinnings of a particular housing project, Lilledahl says. Depending on which of several state or federal funding mechanisms are used to create new housing, an affordable unit may be defined as one that costs no more than 30 percent of the income of those making at least 60 percent of the median income of the Twin Cities area. Some projects have much more stringent requirements, setting aside units for those making only 30 percent of the area median income. And, in a few cases, families and individuals can qualify with incomes up to 80 percent of the median.

To further complicate things, the income definitions change annually and the resulting rents that can be charged are tied to family size. A family of four this year could qualify for affordable housing at the 60 percent level if they earned less than $51,960 annually. A single person would have to earn less than $36,420 to qualify for the same subsidy. The portion of the rent payable by the tenant depends on income and family size, with government subsidies picking up the rest of the unit’s fair market rental rate, which is fixed at $996 a month for a two-bedroom unit. As a comparison, the average two-bedroom apartment rented for $1,190 in the Twin Cities area, according to an August 2015 survey by the Minneapolis-St. Paul Rent Monitor.

The demand for affordable housing is huge, Lilledahl says. There are 20,000 households in St. Paul living in extreme poverty, but there are only 7,490 housing units currently available to those who make less than 30 percent of the median income, she says.

In years gone by, affordable housing was sometimes constructed in the form of massive, government-financed housing projects. “The projects” often led to isolation and segregation of the residents by income and race, and they are no longer the preferred model. Instead, modern affordable housing is often the result of collaboration between public and private funding agencies and developers. In return for subsidies from an alphabet-soup range of public-interest funding sources, as well as carefully calibrated tax relief, private developers agree to reserve a percentage of the units available to those who can’t afford market rate, and blocks of designated affordable units are set aside in what are otherwise market-rate building projects.

An example of such a “mixed-use” building project is 2700 University Ave., a $54 million housing-and-shopping complex going up just over the St. Paul city line at the edge of south St. Anthony Park. In their promotional materials, developers Flaherty & Collins stress their environmentally friendly building practices and the proximity of the new units to the Green Line, but they also call attention to luxury features, such as the planned fitness center, free Wi-Fi, 9-foot ceilings and the 3,000 square feet that will be devoted to a “storefront amenity space.” Twenty percent of the units there, says Lilledahl, will be reserved for tenants making no more than 50 percent of the median Twin Cities income.

Lilledahl allows herself a small measure of pride in the outcome, calling 2700 University a “good project” from the standpoint of the St. Paul Housing Department.


New HUD regulations

Last summer, the U.S. Department of Housing and Urban Development (HUD) introduced a new element into the affordable housing mixture: new regulations warning that federal housing funds could be in jeopardy if states do not act to reduce concentrations of affordable housing in racially segregated and low-income areas.

Lilledahl’s response to the new regulations is to describe what she calls “two schools of thought.” Her office recognizes the importance of “investing in place,” which means supporting pre-existing affordable housing buildings; but the Housing Department is also committed to expanding affordable housing in new directions. The HUD regulations urge communities to “strike a balance” between the two, she says.

One example of continued investment in place is the Como by the Lake Senior Housing project located near the Como Park Zoo and Conservatory. Currently, a little more than half the units are designated affordable housing, but the 30-year-old government contract that guaranteed those rates was set to expire in the next few months, raising the possibility that rents would be allowed to rise and creating fear and uncertainty among the elderly tenants. After her office worked to reach a satisfactory resolution of the problem, Lilledahl notes with satisfaction that nonprofit Minneapolis-based developer Aeon has signed a purchase agreement to acquire the building.

Aeon spokesperson Alicia Cordes-Mayo confirms that the new owners are committed to “keeping Como by the Lake affordable senior housing. . . . [We] support the residents and the pricing that’s already there.”

Obviously, keeping low-income seniors in their homes is a crucial priority for affordable housing, but what about the admonition to spread affordable housing to higher income areas of lower racial concentration?

According to Lilledahl, the St. Anthony Park and Como Park areas are already classified as “non-impacted areas of minority concentration,” meaning that the racial mixture of the residents meets target goals. Although Como Park has some areas of concentrated poverty, St. Anthony Park does not. Does this mean that there will be an effort to establish more affordable housing in St. Anthony Park?

“The city would strive to support developers who would build affordable rental housing of all types in Saint Anthony Park,” says Lilledahl.

Jon Commers, Metropolitan Council District 14 representative, says, “We have a lot of stable institutions in the Bugle [readership] area, making this an attractive prospect for people seeking affordable [options].” Commers talked about the “interest in infill” in our area, where urbanized open spaces are repurposed for affordable housing structures. The proposed Ecumen project, which would locate senior residential housing on the campus of Luther Seminary, is one example of possible infill. Ecumen’s plans include a 121-unit apartment building across from HealthPartners at Como Avenue and Eustis Street 20 percent of which would include 20 percent affordable rate units.

Both Commers and Lilledahl agree, however, that there’s a long road between a proposed project and a finished residential building.

“There is a process for input” by community members before any housing project is finalized, Lilledahl says.

In the case of the Ecumen project, plans call for three proposed buildings. Issues related to the footprint of the project have drawn the attention of the neighborhood and several rounds of community meetings have focused on the many questions related to bringing a project of such size to the leafy Seminary campus. As a result, Ecumen has visibly altered its plans in response to residents’ feedback. And there may be other changes to come as the project works its way through the lengthy process of seeking neighborhood consensus.

Illustrating the complicated course of the planning process, Lilledahl says, “There is no proposal in front of me at this point on the Ecumen Project.”


Judy Woodward is a reference librarian at Roseville Library and a regular contributor to the Park Bugle.

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