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HPP Co-Authors Report Focusing on “Naturally Affordable” Rental Housing
08.12.2013 - HPP

Minnesota housing policymakers have tended to focus, deservedly so, on how to preserve and expand the supply of subsidized rental housing.  The fact is, however, nearly two thirds of low income Minnesota households rely on unsubsidized affordable apartments - "naturally occurring" affordable housing, if you will - for their housing.  That is why five years ago HPP urged that one part of Minnesota's housing preservation proposal to the MacArthur Foundation cover the important topic of preserving the affordability of this part of the housing market.

Now that topic has been addressed in the form of a new report, "The Space Between."  Sponsored by Minnesota Housing, Family Housing Fund and Greater Minnesota Housing Fund, a consultant group was formed to examine this topic in depth, conduct interviews and work sessions with numerous stakeholders, and write a report analyzing the supply and producing a series of recommendations.  HPP was a member of the consultant team.

The report finds that while much of this part of the rental market functions just fine without any further public involvement, there are risks to this critical supply and there are opportunities to make better use of this resource.  The report recommends a series of "light touch" interventions which can more effectively preserve this form of housing, add additional affordability, and better match this affordable resource with those households most in need of it. 

For example, as the region starts to build out a network of transit corridors, concern has grown that in some areas gentrification will take place, which could lead to escalating rents and involuntary displacement of lower income residents.  Unfortunately we have limited tools to address this problem, short of building more affordable housing in anticipation of needing to replace affordable units which are lost.  The report, however, identifies a potential preservation strategy which deserves testing.  Minnesota has a law which provides property tax breaks for subsidized rental housing known popularly as the "4-d" program.  HPP discovered, however, that the law could be extended, without any need for legislative change, to naturally affordable rental properties in certain circumstances.  This suggests the possibility of creating local "4-d" type programs in which local governments offer landlords 4-d eligibility and property tax reductions in exchange for agreeing to restrain rents. 

There are many other recommendations in the report as well, which is just now getting introduced to various audiences of stakeholders around the region.  HPP will continue to push to disseminate the information in this report, and to urge the adoption of pilot programs to test out the most promising ideas in the report.