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Council estimates future affordable housing needs

Numbers will assist communities to update local comprehensive plans

The Metropolitan Council estimates that the region will need 51,000 new housing units affordable to households with low and moderate incomes during the decade 2011-2020. That’s about 30.6 percent of all forecasted new sewered household growth in the decade.

Communities in the seven-county metropolitan area are required by state law to plan for “sufficient existing and new housing” to meet their local share of the region’s overall need for low- and moderate-income housing. The law also requires the Metropolitan Council to assist communities to accomplish this planning.

In January, the Council added to its Local Planning Handbook the estimate of the region’s need for new affordable housing units, and allocated that need among the region’s 128 sewered communities. The Council’s estimates address new housing development because as communities update their comprehensive plans, they must identify the amount of land needed to accommodate both their overall forecasted growth and their share of the region’s affordable housing need. Local comprehensive plan updates are due to the Council by the end of 2008.

Heritage Park, a new development northwest of downtown Minneapolis, is a mix of private-market and publicly subsidized housing.

What is “affordable” housing?

For the purposes of the Council’s affordable housing needs forecasts for 2011-2020, a housing unit is considered affordable if it is priced at or below 30 percent of the gross income of a household earning 60 percent of the Twin Cities median family income. In 2005, the 60 percent threshold was $46,200; 30 percent of that figure is $1,155 monthly.

To determine the region’s affordable housing need the Council engaged an advisory panel of affordable housing experts, including representatives from the Minnesota Housing Finance Agency, the Family Housing Fund, the Association of Metropolitan Municipalities and local community development departments. The group employed methodology used in the 2003 Next Decade of Housing Minnesota report.

“Our goal was to employ a logical, simple and understandable approach to the difficult task of forecasting affordable housing need for a decade that doesn’t start for another five years,” explained Guy Peterson, the Council’s director for Housing and Livable Communities. “We sought to use factors with strong underlying data, and to build on widely accepted research already in place in the region.”

How the housing needs were distributed

The panel’s formula for distributing the affordable housing need among the region’s sewered communities employed four criteria:

• Each community’s share of sewered household growth, as forecasted by the Council in the 2030 Regional Development Framework.
• Proximity of low-wage jobs.
• Existing share of affordable housing units compared to the regional average.
• Level of transit service available to the community as reflected in the Council’s long-range transit plan.

Prairie Crossings Family Townhomes in Lakeville represents a partnership between private developers and Dakota County, with support from a variety of other public sources, including Metropolitan Council Livable Communities funding.

Of the 128 sewered communities in the region, 50 percent would experience an increase in the percent of their housing stock that is affordable by 2020 if they, in fact, added a unit to meet each estimated need. Over one-quarter, or 27 percent, would experience no change in their share of affordable housing, while 23 percent would, although adding affordable units, experience a decrease in the percent of their housing stock that is affordable from what exists today.

The role of the private market

Not all new households in the region with incomes at 60 percent of median or lower will need new housing units. Some of the need will be satisfied by existing private-market units. Research has shown that the amount of lower-income affordable housing in the existing housing stock expands each decade, Peterson explained, a process often called “filtering.” This occurs as some older units depreciate in price to maintain occupancy.

“Increasingly, developing new affordable housing requires private-public partnership and cooperation,” said Peterson. “Whether it is through the use of public subsidies or the reduction of local development regulations and controls, building new affordable housing requires the public and private sectors to work together towards the common objective of producing lower-cost housing. The needs the Council has forecast for 2011-2020 pose a significant challenge for this partnership.”