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HomeMy WebLinkAbout2003 06-09 City Council Manager Workshop PacketAGENDA CITY COUNCILMANAGER WORKSHOP .Monday, June 09, 2003 Council Chambers, City Hall 6:00 p.m. A. CALL TO ORDER Be ROLL CALL C. APPROVAL OF AGENDA D. NEW BUSINESS L Report from Cable Commissioner -Kim Facile 2. Affordable Housing Presentation E. FUTURE TOPICS 1. Sidewalk Study - Overall City Plan -Fall 2003 2. Meeting with School District 623- August /September F. ADJOURNMENT Agenda # MEMORANDUM TO : City Manager FROM: Melinda Coleman SUBJECT: Affordable Housing in Maplewood DATE: June 2, 2003 INFORMATION Action by Council D ate Endorsed A l. a , ' 1 V �C E,,.� l-,e i i d t fir' Rejected rJ The topic of affordable housing is one that has been discussed at the city for quite some time. It has shown up in city goal statements, has a section in our comprehensive plan .. .and has been a part of recent housing developments. It is now a subject of great interest with the proposed Legacy Village Project. The purpose of the discussion with the city council, advisory boards and the Lakeview Lutheran Church is to try to gain an understanding of what affordable housing means. There are many resources on this topic: they are being shared with everyone so we can respond to requests in a more informed manner. Increasing one's understanding will help the city make informed policy decisions as to how and where to provide affordable housing. SUMMARY OF HANDOUTS I have attached several handouts that will be reviewed at the joint meeting on June 9 2003. Following is a summary of the documents: 1. Affordable Housing For the Region- Strategies for Building Strong Communities. This report was put together by the Mayor's Regional Housing Task Force and published by the Metropolitan Council. This report is presented to provide an overview of this issue in the metropolitan area. 2. Housing in Minnesota: A Primer. This document was developed by Housing Minnesota. This explains how income and housing payments relate to median income and the how housing demand has outpaced supply, particularly for affordable housing. 3. Housing Minnesota- Affordable Housing in Ramsey County. This attachment provides information on Ramsey County Housing Costs. There are also two tables; A that shows number of single family homes that are valued at less than $127,000 and those valued at less than $170,000. Table B shows the number of subsidized units in Ramsey County by city. An overview with definitions of unit- based and tenant- bayed assistance is included also (Table Q. It should be noted that the Metropolitan Council has defined affordable single family homes as those valued at $170,000 or less and affordable town homes as those valued at $160,000 or less. 4. Miscellaneous tables related to Maplewood. Table A shows the number of Homestead properties by neighborhood that are valued at $170,000 or less. Table B shows the location and number of subsidized units in Maplewood. Table C is just a listing of properties with unit- based assistance in Maplewood. 5. Attachment S includes excerpts from the Maplewood Comprehensive Plan. This serves as background and also describes the city's goals as they relate to housing policy. There is some information included that is outdated already. Staff will need to update this section in the future. Additional information: Maplewood has 795 manufactured housing units. These would all be considered affordable housing. In 2002, 11 single family homes and 124 town homes were constructed at values less than $170,000. In addition, 5 single family homes and 95 town homes out of the 135 total were constructed at values less than $126,000. Total new residential permits issued last year of town homes and single family dwellings were 176. To conclude, 77% of the new homes constructed last year meet the Met. Council affordable guidelines at $170,000 and of that number 57% were under the $126,000 threshold. Staff will also make a presentation on the Legacy Village project and what the proposed residential components will look like in terms of price range and housing type. We will also briefly discuss the Maxfield Market Study results for the Hillcrest and Gladstone neighborhoods. We will provide an overview of the housing recommendations in the study but won't get into great detail as we will hear a presentation on the findings on June 23 rd Finally, staff will distribute a handout at the meeting, from the Urban Land Institute called, The Case for Multifamily Housing. - This document explains the demographic shifts in housing occurring in the United States and the positives associated with multifamily housing. CONCLUSIONS Staff will review this material with the council, advisory board members as well as the Lakeview Church Housing task force. There is a lot of information being presented but it is beneficial as it helps us understand how Maplewood measures up on the affordable housing front. It appears from the data/studies presented we are well ahead of most cities in Ramsey County in providing affordable housing. It seems that the next step should be a discussion that helps formulate new city policy directives. The city needs to determine how firmly we are committed to continuing with supportive and affordable housing and where it should be located. Attachment 1 Affordable Housing For The Region' Strategies For Building Strong Communities A Report Of The Mayors' Regional Housing Task Force November, 2000 Affordable Housing For The Region Strategies For Building Strong Communities A Report Of The Mayors' Regional Housing Task Force November, 2000 The Task Force invites comments on this report. Comments can be made via the Metropolitan Council's web site, at www.metrocouncil.org, or by mailing them to: Elizabeth Ryan, Director of Housing and Livable Communities, Metropolitan Council, 230 East Fifth Street, Saint Paul, Minnesota 55101. Table of Contents One Resolution . Two I. Introduction 2 What We Mean By Affordable Housing 3 What We Do Not Mean By Affordable Housing 3 The Charge To The Task Force Four II. Why Focus On Affordable Housing Six III. Findings 6 'Affordable Housing Can And Must Be Synonymous With Quality Housing 6 Mixed Income Developments Are A Preferred Way For Providing Affordable Housing 6 Higher Densities Are Necessary To Increase The Supply Of Affordable Housing 8 Most Affordable Housing Will Not Be Produced In The Marketplace Without Incentives 9 Funding Partnerships Are Needed 9 The Effective Solution Will Be A Regional Solution 10 Cities Should Have The Flexibility To Customize Their Affordable Housing Strategies 11 Cities Need Technical Assistance 13 Human And Social Services Play A Limited But Important Role Fourteen IV. Recommendations 14 Provide Leadership 16 Ensure That Local Planning And Zoning Enables Affordable Housing 18 Change Government Practices And Policies To Reduce The Cost Of Building Housing 21 Secure Additional Funding 24 Invest In Skill- Building And Expertise 25 Develop A Support Structure For Those In Need Of Services Twenty -seven About The Task Force Twenty -eight Acknowledgments Twenty -nine Sources Attachments A: Occupations And Housing Affordability B: U.S. Conference Of Mayors And Mortgage Banker Association Five Point Plan To Reinvest In Cities C: Sustainable Streets D: Charge To A Property Management And Maintenance Task Force Mayors' Regional Housing Task Force --1 Resolution A s Mayors of a diverse set of metropolitan area communities, we recognize that all communities need quality housing for people at all income levels and ages. In order for the Twin Cities metropolitan region to grow economically, more affordable housing is needed to" complement the growing job opportunities in all parts of the region. Businesses need access to workers, and workers need housing they can afford. A varied price range of quality housing is an asset to our communities: it reinforces families by creating stable environments in which children can learn and feel secure, promotes attachment to 'community by providing housing for all stages of life, and lends richness to community life through variety and balance. Yet many people, including our young adult children and senior citizens, cannot afford to live in their home towns, nor can many workers afford to live near their jobs. The availability of quality housing and dignified living conditions for people at all stages. of life and income levels is imperative to our region's continued success. Therefore, we will work to increase housing choice in all communities. We will do so in a manner that enhances the livability of communities and neighborhoods. We will create partnerships and explore opportunities that create housing choice without relying solely on scarce public resources. We call upon the broader community, including the financial community, developers, businesses, all levels of government and nonprofits, to assist us with our effort to build a high quality of life and economic prosperity in the Twin Cities region, by joining in implementing our recommendations to: • Provide Leadership • Ensure That Local Planning And Zoning Enables Affordable Housing • Change Government Polices And Practices To Reduce The Cost of Building Housing • Secure Additional Funding • Invest In Skill- building And Expertise, and • Develop A Support Structure For Those In Need of Services Mayors' Regional Housing Task Force --2 I. Introduction What We Mean We By Affordable Housing use the term "affordable housing" throughout this report. Our meaning is simple: the availability of quality housing and dignified living conditions for people of all incomes and at all stages of life. Affordable housing is not a separate class or type of housing that makes it different from ordinary housing. It is ordinary housing: roughly half of home owners in the Twin Cities live in "affordable" housing. But the housing being produced in the market place is less and less affordable to ordinary people people who live in and contribute to our communities. Because affordable housing is linked to the health of our communities, a mix of housing for people of all incomes is essential to the continued prosperity of our cities and the metropolitan region. Some of the more compelling reasons for ensuring a mix of housing are: Academic Performance of Children. Education has been called the greatest economic resource of today. Academic achievement improves when children have stable housing. In a recent study, average reading scores for children who moved three or more times during the year were almost 20%. lower than those of children who did not move.I In another study, eighty percent of homeless children scored in the bottom quartile of an achievement test for academic performance. Strong Economy. Businesses need workers, and workers need places to live. There are more and more examples of business relocations from areas without sufficient housing for workers to areas with such housing. City Fiscal Strength. Preliminary results from a study currently being conducted by the Metropolitan Council suggest that cities can meet their affordable housing goals and experience positive fiscal outcomes. Strong Communities. Our cities should be places where people can live their entire lives if they choose; developing social attachments which promote strong neighborhoods and civic involvement. This is disrupted when young adults, senior citizens and those serving our communities such as teachers, police officers; receptionists, nursing aides and travel agents, are priced out of the housing market. The chart shown in Attachment A shows how difficult it is for workers in many occupations to afford housing. ' The Kids Mobility Project, 1998. Quoted in Family Housing Fund, 1999. Mayors' Regional Housing Task Force -3 Congestion. Lack of affordable housing near the work place contributes to traffic congestion. In 1970, the average trip distance from home to work in the metropolitan area was 6.6 miles; this had increased in 9.2 miles by 1990. Congestion on metropolitan freeways rose from 25% of total freeway miles in 1990 to 50% in 1997. Opportunity. Some people face difficult life transitions, such as welfare to work, or homelessness. Without stable housing, it is virtually impossible for them to succeed at their transition to economically secure and self- sufficient lives. Because of the lack of affordable housing, family homelessness has increased dramatically. A 1997 survey of homeless people found that 34% were working; 19% had full time jobs. In short, a mix of housing is fundamental to the quality of life in our cities. What We Do Not Mean By Affordable Housing unfortunately, affordable housing has come to have many different, often negative, connotations. A stereotype of "affordable housing" has developed, based on failed public housing developments of the past. In the worst scenarios, affordable housing has become a synonym for inept government programs, poorly maintained housing, social decay and crime. We reject this view of affordable housing. When we speak on these pages of affordable housing, we mean the availability of quality housing and dignified living conditions for people of all income levels, at all stages of life. We also mean housing that fits well into its neighborhood. The charge To The Task Force The charge to the task force was to identify ways of increasing the supply of affordable housing. We examined a number of supply side factors such as fees and regulations, the availability of land, and the provision of producer subsidies. We also looked at no -cost items that restrict the supply of lower priced housing, such as lack of public support. The demand side of the housing equation is equally important. However, solutions on the demand side (as functions of income and demographics) tend to be difficult to address at the local level. 1 Quoted in Findings, Wilder Research Center, 2000. Mayors' Regional Housing Task Force -4 I I. Why Focus On Affordable Housing .The need for more reasonably -priced housing has ballooned. The Metropolitan Council estimates that at least one in five of all regional households lives in homes that are not affordable to them— that is, they are forced to pay more for housing than they can reasonably afford. An estimated 161,000 households in the Twin Cities pay half or more of their income for housing and/or live in substandard housing conditions. Of these, 46,000 are moderate income working families, 72% of whom live in the suburbs. Another 53,000 households are elderly or marginally employed. Housing prices in metropolitan areas throughout the country continue to rise at a pace that makes housing costs increasingly burdensome for households of modest or low incomes. During the first three months of 2000, average rents in the Twin Cities metropolitan area increased to $742 a month, an 11.5% increase over the same period in 1999. The median price of closed home sales in the Twin Cities metropolitan area reached $145,000 in May of 2000, an increase of 10.8% from May of 1999. In comparison, the Family Housing Fund points out .that ownership of even a modest three bedroom home priced at $113,000 is out of reach for households with a single wage earner employed in a job such as a school bus driver, receptionist, or bank teller. The average rent for a two bedroom apartment (at $822 a month for a two bedroom apartment in 2000) also exceeds affordability limits for workers employed in such jobs. The housing market is being driven by our strong economy. The Twin Cities has benefited tremendously from this, but the strong economy pushes up housing demand as well as production costs. Both have the impact of increasing the price of housing. On the demand side, higher incomes, a growing population and lower interest rates push up the price, size and quality of housing being built. Per capita income in the metropolitan area in 1998 was 123% of the national average, the fifth highest metropolitan area in the country. Growing population and smaller household sizes also increase pressure on the housing market: it is estimated that the number of households in our region will grow by a Stegman, Quercia and McCarthy, 2000. 5 Pioneer Press, June 13, 2000. Mayors' Regional Housing Task Force --5 270,000 between 2000 and 2020, all of which will need housing. Consumer expectations have changed. Nationally, the median size new home built in 1998 was 44% larger than the median size new home in 1970. The proportion of new homes with two or more baths increased by 94 %, with four or more bedrooms by 37 %, while. those with fireplaces increased by 74% and air conditioning by 144 %. On the supply side, the strong economy tightens the labor market, which increases construction costs, and creates bidding wars for land, which pushes up the price for land. In the ownership market, this can lead to bigger and more expensive homes. In'the rental market, these forces have led to a decrease in production in multifamily housing: permits fell from 6;160 per year in the 1970s and 1980s to 1,010 units per year in the 1990s. The resulting .vacancy rate today is 2 %, among the lowest in the nation. A five percent vacancy rate is considered a healthy market. Low vacancy rates drive up rents. They have also created a situation where an estimated $14 million of Section 8 housing choice vouchers are going unused each -year. Section 8 vouchers are a "demand side" solution to affordable housing, because they supplement a renter's income. However, the supply of rental housing is so low, landlords can find renters to occupy all of their rental units without having to accept Section 8 vouchers. Renters who use Section 8 vouchers are being turned away, and these same renters are forced to rent their housing without the aid of the vouchers. This places a tremendous burden on the household budget, which in extreme cases leads to choices between paying for medicine or rent (an estimated one -third of those eligible for Section 8 are elderly), or to homelessness when rent payments become too expensive (women and children are the fastest growing segment of the homeless population). ' Maxfield Research Inc., 2000. Mayors' Regional Housing Task Force -6 Findings Affordable Housing Can And Must Be Synonymous With Quality Housing Our goal with affordable housing is to strengthen our communities. We want to ,build strong neighborhoods. This can be achieved by ensuring that those who wish to live in our communities can afford to do so. We must not accept solutions for affordability that produce cheap, poorly designed housing that quickly deteriorates, impoverishing both its inhabitants and the neighborhood. Quality housing in our view is housing that is: 1) long- lasting; 2) indistinguishable from neighboring market rate .housing; 3) designed to fit the neighborhood context; and 4). well-maintained and managed. There are many fine examples of such affordable housing being produced in the Twin Cities today. We do not believe that cutting corners on construction, design and management is the way to produce strong neighborhoods. Mixed Income Developments f Offer A Preferred Alternative For Providing Affordable Housing we have learned from past mistakes about the great harm that results when the poor are isolated in pockets of poverty within neighborhoods. While mixed income developments have yet to be fully embraced by the marketplace, we conclude that the best way to provide housing for people of all incomes is in mixed unit developments. Older neighborhoods, with their mix of large and small homes interspersed with small apartment buildings, are a testimony to the success of this approach. This can be achieved today by developing a mix -of housing in large scale developments, such as West Ridge in Minnetonka, by mixed income buildings like Creamette rental apartments in Minneapolis, or by scattered site ownership housing such as that built by Habitat for Humanity throughout the Twin Cities. Higher Densities Are Necessary To Increase The Supply Of Affordable Housing The availability of land and how it is zoned affect the supply of affordable housing. First, more compact development can reduce the per unit cost of housing. For example, a study by the Builders Association of the Twin Cities (BATC) which examined four metro area cities showed Mayors' Regional Housing Task Force -7 that increasing density to 4.8 units per acre saved between $2,000 a unit in infrastructure costs (where the existing density was 3.5 units /acre) to nearly $10,000 a unit (where the existing density was 1.6 units /acre).' Second, land use restrictions such as large lot sizes or lack of zoning for rental properties, limit opportunities to build affordable housing. Scarcity of land can result, which may force prices up. Third, we believe that the health of our cities and region is tied to a mix of housing, for the young, the elderly, workers, single people and families. With growing populations, this can only be achieved with more compact growth. Opponents of higher density housing associate it with unattractive or incompatible development, or with environmental degradation. We have reviewed examples of new models of affordable housing, which focus on integrating affordable housing into the neighborhood through sensitive design and by using mixed income, rather than exclusionary, development. We conclude that there need not be a trade -off between . density and good design; there are many examples of well - designed and attractive higher density properties. Likewise, there need not be a trade- off between environmental protection and higher density. An emphasis on good design will result in affordable housing that is attractive and compatible with the neighborhood and sympathetic to the natural environment. A counter argument to higher density developments would be to make land more readily available and therefore less costly. We reviewed a number of studies on the impact on urban growth restrictions on the price of land and the supply of affordable housing and found the available evidence to be inconclusive. First, while restrictions on land supply do generally act to increase the cost of land, other factors, such as income and location, interact with land supply to determine the ultimate price. Second, it is not clear what impact the Twin Cities' metropolitan urban service area (MUSA) boundary has on land prices, since this line is set by cities to guide growth, not contain it. Third, our goal is to accomplish housing choice in all cities, and it is debatable whether relaxing the MUSA boundary would provide an effective solution to the provision of affordable housing in any cities except those on the urban edge. Fourth, compact growth saves agricultural lands and allows farm production to take place closer to the markets, saving fuel and time. 'Builders Association of the Twin Cities, 2000. Densities are net densities calculated by dividing the number of housing units by the total acreage of the site minus stormwater treatment areas. Mayors' Regional Housing Task Force -8 We support the approach of the Metropolitan Council's Regional Growth Strategy, which aims at using land more efficiently and cost- effectively. The strategy underscores the importance of linking new affordable and life cycle housing with existing and growing employment opportunities, with existing and planned transit service and with the availability of retail and personal services. We believe that this type of growth will build strong individual communities as well as a prosperous region. Most Affordable Housing Will Not Be Produced In The Marketplace Without Incentives in all markets, there is an "equilibrium" price for products below which a product, like housing, will not be produced. Strong demand and increasing production costs push up equilibrium prices. Supply below the equilibrium price is not produced. Demand below the equilibrium price is not satisfied. While this is not problematic for the vast majority of products, it becomes a serious problem when the good is a basic need, i like housing. Of course, the housing market is very complex, offering multiple products in a multitude of locations, and it is highly influenced by government policies ranging from federal tax law to local land use, decisions. The cost of housing can be reduced, and we recommend a number of policy changes which would enable the marketplace to make housing more affordable. Given the great need for affordable housing, we must enable the marketplace to produce as much affordable housing as possible. But it is important to stress that these cost reductions, as important as they may be, will never be sizable enough to fully eliminate the need for subsidies to produce affordable housing for all income levels. Developers who spoke to the task force confirmed that most affordable housing will require financial assistance. The strong demand for higher priced homes provides developers with ample opportunity to make a profit' without the complications typically associated with producing affordable housing, such as complex financing arrangements and political opposition. In thinking about the need for financial incentives K Estimated to be 9.2% of the sales price of single family homes in the U.S., in The :Truth About Regulatory Barriers to Housing Affordability, National Association of Home Builders. Mayors' Regional Housing Task Force -9 to develop affordable housing, we must recognize that through the federal mortgage interest deduction and /or the property tax structure, virtually every homeowner in Minnesota receives a subsidy for their housing, making it more affordable. Funding. Partnerships Are Needed To produce housing for all income levels, subsidies are needed. The Minnesota Housing Finance Agency estimates that it would cost $500 million a year to alleviate the housing cost burden for those paying more than 30% of their - incomes on housing. For example, in the fall of 2000, the Minnesota Housing Finance Agency "is helping finance 275 units of affordable rental housing. On average, these units rent for $735 a month and are affordable to households at 46% of median income. Private financing only supports 24% of the development costs of these units. The average financing gap is $103,000, of which $65,000 is filled with tax - credits and $3 8,000 with deferred grants or loans. The enormous amount of money needed means that no single sector or government jurisdiction can do it on their own. The public, the private and non -profit sectors all must contribute. Local, state and federal governments all must contribute. We remain concerned about long term affordability. Given the substantial investment of public dollars to make new rental properties and some ownership homes affordable, it is important to find mechanisms of ensuring that these properties remain affordable for long periods of time. Public investments in housing should be able to be recaptured and reinvested if there are capital gains when the housing is sold. There are models of achieving long term affordability, such as covenants, deed restrictions and land trusts. However, these are complicated and difficult to bring about, especially if the properties are owned instead of rented. Partnerships can help explore and test new models for long term affordability. The Effective Solution III Be A Regional Solution We are a regional economy. Effective solutions to affordable housing recognize that fact. The city that restricts the supply of affordable Mayors' Regional Housing Task Force -10 housing restricts the supply for the entire region, drives up prices in the regional housing market, or forces other cities to build a disproportionate share of such housing. If cities of our region cannot supply enough housing for workers, we may start to find that businesses leave to areas where such housing is more readily available. Cities that restrict the supply of affordable housing foster sprawl, increasing pollution and traffic congestion that harms the livability of our entire metro area. Most cities in our region recognize the importance of providing affordable housing in their communities. In 1998., 101 of 143 metropolitan cities chose to participate in the Livable Communities Act program. These cities established goals that collectively would add 68,553 affordable ownership homes and 12,885 affordable rental homes by the year 2010. These efforts should be recognized and rewarded with financial incentives that help produce and retain affordable housing. We endorse the Metropolitan Council's role and approach in encouraging cities to cooperate in building a strong regional housing market, not ,through mandatory rules and regulations, but through planning and financial incentives. Empirical evidence suggests that in regions with a multitude of local governments, competition between cities suppresses local government spending on housing, whereas intergovernmental incentives positively influence local spending for affordable housing.' Experience with the Livable Communities Act seems consistent with these results. Therefore we are supportive of the current approach to affordable housing. However, it should be strengthened by using cities' progress in building affordable housing as a criterion for the distribution of other financial assistance provided through the Metropolitan Council and state agencies, such as transportation funding and pollution clean up. Cities' past efforts in building affordable housing should be credited when making these funding decisions. Cities Should Have The Flexibility To Customize Their Affordable Housing Strategies Cities should have the flexibility to customize their affordable housing strategies, provided that the strategies supply quality housing for people 9 Basolo, 1999. Mayors' Regional Housing Task Force -11 of all income levels and at all stages of life, and that they conform to the metropolitan Regional Growth Strategy. The cities in the metropolitan area vary considerably, and each has different needs and opportunities. Cities differ, for example, by the size and make up of their population, economic base, stage of development, and natural environments. Cities' .needs for affordable housing will differ accordingly. Flexible strategies require flexible resources. A report of The Center for Housing Policy calls on the federal government to provide a "menu of flexible housing resources""' which will enable localities to customize their own affordable housing strategies. We concur with this, and believe that flexibility should be a principle for the use of state and metropolitan resources as well. Flexibility will help ensure that we are building affordable housing and strong communities. Cities Need Technical Assistance For years the federal government played the primary role in financing ' affordable housing, using a combination of federal programs and federal tax incentives. This has changed. Federal funding once supported the production of more than 500,000 additional housing units a year (in 1976) through direct .appropriations to the Department of Housing and Urban Development. Today the primary emphasis of direct appropriations is not on production, but on supplementing the incomes of poorer households so that they can afford housing. In addition, the reach of federal tax incentives aimed at spurring the production of affordable housing was curtailed in 1986. The overall result from these changes at the federal level is a shift in responsibility to non - profits and local governments. The impact of this shift in responsibility is enormous. Housing production is expensive, time - consuming and complex. Housing finance is an arcane and extremely complicated field. New housing products aimed at increasing the supply of affordable housing, such as mixed income developments and land trusts, require painstaking attention and care. Quality design and the accomplishment of multiple objectives, such as higher density and environmental protection, are arts as well as sciences. Community involvement and support are also a mandatory part of the housing development process today. 10 Stegnan, Quercia and McCarthy, 2000. Mayors' Regional Housing Task Force -12 Another emerging area of responsibility for cities is their role in setting expectations for and facilitating sound property management. Skilled property management and maintenance are critically important to the quality of any residential property. Some aspects of good property management unfold with the operation of the property, such as careful tenant screening, and ensuring that human and social services are readily accessible to tenants who may require them. Others are set in place with the development of the property, such as design that deters crime, or the establishment of proper reserve levels to ensure that funds are available for the maintenance -of rental properties or property held in common through homeowners' associations. Cities can play an important role in setting the stage for good property management through their involvement in the development process and through ordinances that encourage good management practices. In many cases, cities have neither the staff nor the expertise to negotiate and guide housing developments successfully through complicated financial structures and development agreements. In other cases, such as ensuring that properties are well managed, cities are taking on new roles. If every affordable housing development represents a new learning curve, progress will indeed be slow. Cities throughout the state need assistance and tools that share lessons learned and available expertise. Likewise, apartment managers and owners, developers and home builders could potentially benefit from programs designed to improve skills in producing and managing affordable housing. The good news is that many fine resources exist. But cities would benefit greatly if there were "one -stop shopping" for guidebooks and information, training workshops, educational seminars, and forums. There is also much to be learned by sharing local experiences with one another. We concur with the U.S. Conference of Mayors' emphasis on educational and policy summits (see Attachment B) and believe that such action should be formalized here in Minnesota. Mayors' Regional Housing Task Force --13 Human And Social Services Play A Limited But Important Role For -some people, a decent place to live is an important part of improving their life circumstances, but they also have other issues that must be addressed. Good housing must be supplemented with human and social services as needed. The types of services vary, and can range from day care, parenting skills, job training and referral, housekeeping skills, budgeting and literacy programs. It is critical that a menu of services be readily accessible to residents. Landlords are not in the business of providing such services, nor should they be. They should recognize, however, that the availability of services will improve the integrity of the housing for all who live there. Landlords should act as facilitators, enabling service providers to identify and serve residents' needs. Human and social services providers should package their services to tailor them to the needs of residents and to improve accessibility. Another issue is one of problem tenants. Tenants who have been evicted need help to correct their problem behaviors, so that they will have decent places to live and so that rental properties are not disrupted by their behavior in the future. Emerging efforts in this area need to be supported by tenant services, landlords, the legal community and nonprofit service providers. Mayors' Regional Housing Task Force --14 IV. Recommendations Provide Leadership Local officials must be "ambassadors" for affordable housing. We must work hard at ensuring that more affordable housing is provided, just as we work hard at ensuring that jobs, schools and parks are provided. Worn myths, such as "affordable housing destroys property values" must be overcome. For example, a recent study by the Family Housing Fund found little or no evidence that tax - credit rental housing erodes surrounding home values. We must welcome rental properties as' a key component of housing choice in our cities. We must spread the word that affordable housing means housing for teachers, police officers, receptionists, -nursing aides and travel agents, and the many others who serve and contribute to our communities. The lack of affordable housing for workers has become a major issue for the business community. The Minnesota Chamber of Commerce, for example, has established its own task force on affordable housing. The business community can show leadership by speaking out for affordable housing and letting citizens and political leaders know that affordable housing is an important economic issue. The business community can also be effective at the local level. Far too often, affordable housing developments lose by a narrow one vote margin in city council chambers, because there is no one there to speak in favor of the development. The presence of the business community would send a strong signal about the economic importance of affordable housing. We know from experience that the presence of local business leaders has a positive effect on the outcome of local affordable housing decisions. Local faith communities have an important role. In many cities, faith- based organizations have been instrumental in bringing communities together around the issue of affordable housing, promoting an understanding of affordable housing, and working with residents to resolve concerns. Other faith -based organizations help produce affordable housing. We welcome and encourage the continued support and leadership of faith -based organizations. " Family Housing Fund, 2000b. Mayors' Regional Housing Task Force -15 The task force will: *Encourage mayors to take leadership roles in national organizations, such as the League of Cities and the U.S. Conference of Mayors, to promote efforts related to affordable housing. A current opportunity is the five -point plan developed in partnership between the U.S. Conference of Mayors and the Mortgage Bankers Association. Information about this plan can be found in Attachment B. • Endorse the HousingMinnesota Campaign and encourage cities to participate. • Meet with the editorial boards of the two metropolitan newspapers. A press packet will be developed for suburban mayors to use with their local newspapers. • Co- sponsor a briefing session for the Minnesota congressional delegation and staff, addressing the need for affordable housing in Minnesota and the importance of federal programs. (Possible partners are Fannie Mae, the Minnesota Chamber of Commerce, the Metropolitan Council, the _Family Housing Fund, the Minnesota Housing Finance Agency, the Minnesota Chapter of the National Association of Housing and Redevelopment Officials, the Association of Metropolitan Municipalities, the Minnesota Association of Local Housing Finance Agencies, and faith -based organizations such as MICAH and ISAIAH.) • Develop and pilot a fact sheet for task force members' city councils. The information would include: city- specific new census data about the demographics of those already living in each city (as a means of suggesting the types of housing needed), responses to questions such as the impact on property values, and the impact on cities if affordable housing is not built (studies of the Family Housing Fund), and regional information on projected population and job growth. Mayors' Regional Housing Task Force -16 The task force encourages cities to: • Engage in a process that assesses the needs and opportunities for affordable housing (see for example, Burnsville's "Housing White Paper") and develop a customized strategy for building affordable housing. • Work jointly with one another, to raise visibility and support for affordable housing. • Engage residents in meaningful planning processes, well before a vote is needed on specific developments. The task force encourages , the business, faith -based and non- profit communities to: • Become more actively involved in supporting the development and management of affordable housing in their communities, and in reaching out to residents to address their concerns. Ensure That Local Planning And Zoning Enables Affordable Housing cities designate land use, establish zoning ordinances and impose permit and development fees. We heard evidence. and agree that certain local requirements (such as large minimum lot and house sizes, setbacks and street widths) reduce density and thereby increase the cost of a lot and the home that must be built on that lot to cover the cost of the land. Lower densities may also contribute to high infrastructure costs, as described above. However, we doubt whether smaller lots, in and of themselves, produce smaller homes or affordable housing. Sometimes developers/home builders simply build large houses on smaller lots. We also found evidence that some cities' zoning regulations are inconsistent with their land use plans it is not possible to achieve the densities stated in their land use plans when zoning and subdivision regulations are applied. A study of four growth cities by the Builders Association of the Twin Cities revealed that the density goals for two cities were not achievable under existing zoning and subdivision requirements. (The other two cities did not have stated goals.) In one of the cities, for example, the comprehensive plan called for a development Mayors' Regional Housing Task Force -17 goal of 4.9 units per acre. When zoning regulations such as setbacks and street widths are applied to the design of a development, only 2.1 units per acre could actually be achieved. To fulfill Land Planning Act requirements, and to be true to the housing and land use goals cities adopt in their comprehensive plans, cities must make their zoning ordinances consistent with their comprehensive plans, including the densities for residential development called for in their plans. The densities at which land is guided for development must be achievable in the zoning ordinance. Efforts by cities would be strengthened or hastened considerably if complemented by efforts of other jurisdictions and organizations, as recommended below. The task force encourages cities to: • Work with the Metropolitan Council through the Association of Metropolitan Municipalities to jointly develop a survey of local governments in the urban service area to gather baseline information pertaining to communities' zoning and subdivision regulations. The survey would take place once cities have had the opportunity to revise their ordinances to make them consistent with their updated local comprehensive plans. We ask that this survey be conducted in 2001 and that the results be reported to all cities and the broader community. • Ensure that local zoning and subdivision regulations make it possible to achieve the affordable housing and density goals set forth in land use plans. The Metropolitan Land Planning Act requires this. We recommend that cities self - monitor their progress in achieving their stated goals, and report the results publicly to citizens and to the Metropolitan Council. • Establish higher densities, but ensure that the higher densities help cities achieve their affordable housing goals. We encourage cities to develop standards and guidelines for residential development that is more compact and that produces housing which is high quality, attractive, and at least 20% affordable. Mayors' Regional Housing Task Force -18 • Adopt and use flexible land use regulation practices such as adjustable requirements, zoning overlays and special zoning districts. Such practices can promote the production of quality affordable housing by enabling more compact growth and fostering design solutions to meet residents' concerns and to ensure that a development fits well into the neighborhood. Flexible practices can also help create or enhance a town center or central destination by encouraging mixed -used developments which include an affordable housing component.. • Adopt new standards for the widths and design of streets (see Attachment C.) The task force requests the State Legislature to: • Revise state law to make it easier for local governments to rezone land, by eliminating the supermaj ority requirement and veto power by adjacent landowners in cities of the first class. We recognize this is a sensitive issue but believe that it is important to begin discussions about the repercussions of this law for residential development and the future course of our metropolitan area. Change Government Policies . And Practices To Reduce The Cost Of Building Housing D evelopment fees. Our review suggests that some local practices may add to the cost of housing. This is supported by the work of others who have examined affordable housing production. Some of these practices have been identified with firm evidence; others are more anecdotal in nature. We found that development- related fees vary considerably from community to community. Although fees can add several thousand dollars to the cost of housing, it is not clear that fees keep housing from being "affordable." However, for families on the margins of being able to afford a house, the fees can make a difference. The BATC study, for example, suggested that a $10,000 increase in the price of a home puts the house out of reach for 40,000 families. Mayors' Regional Housing Task Force -19 We focus our recommendations on avoiding unnecessary fee - related costs, noting that requirements across different levels of government may be duplicative, that there is at least anecdotal evidence that some cities set fees above the costs they are incurring, and that some items funded by fees, such as parks and trails, would perhaps be better funded by an alternative financing source. However, in order for serious progress to be made in this area, there needs to be developed a body of evidence that goes beyond anecdotal. A survey of municipal fees by The Association of Metropolitan Municipalities shows that fee structures vary widely, and one might conclude that the higher end fees are excessive. In one city, water connection fees were extremely high —a cost that adds to the cost of building housing. However, the connection fee was offset by lower ongoing water service fees to the home owner. Without further study providing a truer comparison of municipal fees, cities will not have the information they need to set fees that are fair and reasonable. Property taxes. While property taxes are not a production cost per se, they are capitalized into the cost of providing rental housing. The effective tax rate for rental properties is at 3.2% for the year 2000, compared to an effective tax rate for homesteaded properties of 1.4 %. If rental properties paid at the same rate as homesteaded properties, their tax burden would decrease by $138 million in the year 2000. The property tax burden has an impact on the production of rental units: it has been estimated that it reduces the amount of mortgage that can be supported by $6,700 to $11,300 per unit. Compact growth. We also found that more compact growth can help reduce the per unit cost of housing. Recommendations related to achieving higher densities are provided in the section above. The task force will: • Support efforts to reduce the class rate for rental properties, provided that the loss of revenues is compensated in some manner (for example, through the state's I% for affordable housing recommended below), and that incentives are created for the production of affordable rental housing. If these Mayors' Regional Housing Task Force -20 provisions are not met, homeowners and businesses will bear a greater property tax burden with no gain in affordable housing. • Support efforts to reduce the property tax as a source of funding for education, as a means of reducing property taxes for all housing. The task force encourages cities to: • Review their development and permit fee. systems, to ensure that they are fair and equitable for all residential development, that the fees are commensurate with benefits received, and that the fees are no greater than the cost of the services provided. • Ensure that their internal plan check processes are timely, consistent, and do not result in last minute costly changes to building construction. • Waive fees for affordable housing developments whenever possible. The task force requests: • The Metropolitan Council and the Association of Metropolitan Municipalities to jointly commission a study of the impact of municipal fees on affordable housing. This study should involve representatives from cities and home builders, and should identify and focus on those fees which have the greatest potential impact on affordable housing. We ask for this study to be completed by March 1, 2001. • The Department of Administration to ensure that the building code process in Minnesota has the capacity to quickly utilize new proven technologies that reduce the cost of housing construction. • The League of Minnesota Cities to convene state and local officials to ensure that codes are applied consistently across jurisdictions. Mayors' Regional Housing Task Force -21 Secure Additional Funding As described above, reducing the cost of housing helps make it relatively more affordable, but cost reductions will not ensure that housing is available for people at all income levels. Substantial sums of money are needed to ensure that all residents of the metropolitan area have access to affordable quality housing. We strongly believe that property taxes as a source of funding for affordable housing subsidies are not the solution. We support the decrease in property tax class rates for rental units, with qualifications, because rental properties should not be more burdened with property taxes more than ownership housing. However, property taxes, as the source of funding for city services, are strapped. Raising property taxes (as a source of funding) makes housing generally less affordable. Cities have been diligent about using local financing sources to fund affordable housing. Since the Metropolitan Council began gathering data under the Livable Communities Act (LCA), cities participating in the livable communities program have always spent more local funds on affordable housing than is required by the Act. This should continue, but must be complemented with strengthened commitments from other levels of government. Federal appropriations for housing fell from $93 billion in 1978 to $26 billion in 1999. The switch to reliance on federal housing tax credits and private activity bonds has not compensated for this reduced level of spending; neither have been increased for inflation, and therefore these sources. are worth a third less today than when they were first instituted in 1986. State appropriations today, of $124 million for the current biennium, are at their highest level ever, although the appropriation pattern followed that of the federal government during the 1980s, with a sharp decline and low levels of spending throughout the 1980s. The Inclusionary Housing Account of the Livable Communities Act has been highly successful in helping fill the financing gap for a number of mixed income housing developments. However, its one -time appropriation of four million dollars is depleted. Mayors' Regional Housing Task Force -22 We call on all levels of government to work with cities to make affordable housing possible. We also look to the private and nonprofit sectors to join with us in funding affordable housing. Finally, we must make better use of existing resources. Of concern is that at least $14 million a year of Section 8 funding is currently going unused. Use of these housing choice vouchers could help existing renters better afford their housing. In particular, an estimated one -third of those who use Section 8 vouchers are households headed by someone 62 or older or disabled. Changes in the Section 8 program make it more attractive and convenient for landlords to use, including renter education programs, flexibility in the number of Section 8 households a landlord chooses to rent to, the ability to treat assisted renters the same as unassisted renters with respect to security deposits and non - renewals, and assistance in obtaining rental histories. The task force will: Support the efforts of those advocating that the state dedicate I% of its general fund budget to affordable housing, which would provide around $230 million per biennium. The task force encourages cities to: • Publicize the availability of Section 8 money and information about the program's new features and who benefits. .. ,The task force requests the State Legislature to: • Dedicate a portion of the mortgage registry tax to affordable housing. Receipts from this source rise when the housing market is strong and prices are pushed upward, providing a logical connection between this tax and the need for affordable housing. These funds should be flexible, to support the variety of needs in different communities and should be distributed through the Metropolitan Council's livable communities program. Options include: a) Redirect a portion of existing tax revenues to affordable housing. b) Cap the existing distribution of tax receipts at an amount based on the average annual receipts over a defined time Mayors' Regional Housing Task Force -23 period; make excess funds available for affordable housing. • Dedicate most of any increase in the private activity bond cap to housing. • Revise state law to make housing revenue bonds a more effective tool for financing affordable housing that is built as part of mixed income developments. • Reappropriate funds for Inclusionary Housing Account of the LCA. The task force requests the federal government to: • Increase the caps on private activity bonds and low income housing tax credits, and index them for inflation. These are critical and urgent needs, since these tools provide the major source of financing for affordable housing in this country. Because the caps have not been indexed for inflation, their dollar value is worth a third less today than in 1986 when they were first instituted.. • Return to the business of producing affordable housing in ways consistent with the vision of affordable housing described in this report. • Support the, initiative of the U. S. Conference of Mayors to develop a national policy for reinvestment in cities which addresses issues such as incentives and strategies for transit - oriented mixed -use development, tools and incentives for the development of affordable housing, and tax credits for employers who provide housing assistance. The task force requests the business community to: • Adopt funding programs which improve the affordability of housing in their communities. The task force would be supportive of corporate tax incentives for those who do so. Mayors' Regional Housing Task Force -24 Invest In Skill - building And Expertise we believe strongly that it is important not only to make affordable housing available, but to make it successful. As described above, the production and management of affordable housing involve a wide range of expertise, including financial, architectural design and engineering, market studies, legal issues and property management. If cities are to take command of the growth processes in their cities and take heightened responsibility for affordable housing, they must have access to the needed expertise and skills. There are many excellent resources available, but nowhere are these available in a readily accessible and coordinated manner. Throughout these pages we are encouraging people to think in new ways about affordable housing especially with respect to mixed income developments. This means that affordable housing development sometimes challenges existing expertise. There is much cities can learn from each other as they try new things, and these lessons should not be lost as we proceed. A resource center which captures, shares, and helps cities institutionalize these lessons would speed progress on affordable housing production throughout the state. The task force requests the Association of Metropolitan Municipalities, the Metropolitan Council, the Minnesota Housing Finance Agency, the Minnesota Multi Housing Association, the League of Minnesota Cities, the Minnesota Chapter of the National Association of Housing and Redevelopment Officials, the Minnesota Association of Local Housing Finance Agencies, and the Builders Association of the Twin Cities to jointly develop a coordinated system of technical assistance that will assist cities throughout the state and perform functions such as the following: • Add to the information base in important areas, such as convening developers and housing experts to identify how to get developers involved and interested in building affordable housing, or exploring methods for ensuring long term affordability. Mayors' Regional Housing Task Force -25 • Convene a group of professionals to develop model ordinances and guidelines to promote best practices for property management and maintenance, with special attention paid to mixed income developments. The charge of such a group is found in Attachment D. • . Facilitate mixed - income developments by developing a guidebook for cities based on local case studies. The guidebook should address issues such as: subsidy levels required for different types of housing, zoning and land ownership options, the complexities of the financing process, mechanisms needed to ensure the provision of affordable housing, how to clarify expectations of developers, means for ensuring long term affordability, the role of design guidelines in ensuring quality outcomes, and models for providing human and social services when needed. Provide training to guide cities through the process of negotiating development agreements with developers/builders, or understanding the complexities of mixed use, mixed- income developments. • Develop a model housing rehabilitation program, including code enforcement ordinances, inspection programs, design and technical advice, partnerships with community organizations and loan pools. This could include the development of a joint remodeling plan book, _such as A Remodeling Planbook for Post- WWII Houses, cosponsored by a consortium of fifteen metropolitan area cities. Develop A Support Structure For Those In Need Of Services we have stated that people of all incomes and life circumstances should have affordable and dignified places to live. We have affirmed the benefits of mixed income, rather than exclusionary, housing developments. We have stated our goal of building strong communities and described affordable housing as being quality places to live. In order for all of these to be accomplished, we stress the importance of Mayors' Regional Housing Task Force --26 providing human and social services to the limited segment of the population that needs help beyond the provision of a decent place to live. We find this issue to be integrally connected to the task force's charge to identify ways to improve the supply of affordable housing. In order to build more affordable housing, we must be able to show that affordable housing can be done successfully. Some small portion of affordable housing requires services to be successful. The task force requests: Faith communities to extend their work on affordable housing - beyond production, into exploring how they might support services for those in need. • Nonprofit agencies to explore possibilities for working with problem tenants so that they can secure stable housing and contribute to healthy housing environments. • County social service agencies to rethink how they might coordinate or repackage their services for those living in affordable housing developments that may need such services. This should include participation in the planning and development stages of new housing. Attachment 2 June 28, 2002 Housing in Minnesota: A Primer Developed by HousingMinnesota Introduction An adequate supply of affordable housing is the foundation of healthy communities. Healthy communities support a productive labor force that fills vital positions such as nurse's aids, childcare workers, and teachers. Children in stable homes can focus on school, play, and friends without worrying about when they'll move again to a new neighborhood. With an adequate supply of affordable housing, people with fixed incomes, such as senior citizens, can live without the worry of losing their homes. Affordable housing creates opportunities for people to hold steady jobs, pursue education, weather difficult tunes, and contribute to their community. Investments in housing pay off in other ways. The economic leverage of a public investment in housing is profound.. For every $10 million invested in Minnesota's housing industry, the state's economy will benefit from 2,676 new jobs and $69 million in new wages.' g As fundamental as it is, however, housing is. not available and affordable to increasing numbers of Minnesotans. Not only do low - income households find the current market difficult, but those with moderate incomes are also seriously affected by home prices and rents that have out -paced inflation and wages. By some estimates, as many as 350,000 (or, one in five) Minnesota households face a housing cost burden. At the same time the housing crisis deepens for low and moderate income Minnesotans, homelessness for the most vulnerable individuals and families is increasing. This problem is compounded by the lack of assistance to help people rebuild their lives and participate in community life. The severity of the problem has been a catalyst for increased public awareness and community mobilization. Community leaders realize that the lack of affordable housing is a growing problem that extends beyond the impact on individual low- and moderate - income residents of Minnesota -- it threatens Minnesota's quality of life and economic competitiveness. The state of Minnesota has been a national leader in crafting initiatives to address the lack of affordable housing. Minnesota's economy, when compared to other states, is strong on many fronts: fewer households in poverty; higher household incomes; and a growing job base. This economic strength allows Minnesota. a unique opportunity to meet the housing challenges faced by the people of this state. What is Affordable Housing? The standard definition of affordable housing is drawn from government housing agencies and the private mortgage industry. They view 30 percent of a household's gross income for housing i Calculated by the Institute on Race & Poverty based on the US Department of Commerce, RIMS II Analysis for Minnesota, 2001. 2 U.S. Census 2000. This number refers to Minnesotan households that pay in excess of 30% of income for housing. 3 U.S. Census 2000. expense as a standard of affordability. Generally, when individuals or families spend more than 30 percent of their income to meet basic housing costs they do not have enough income to meet other basic needs (such as food, clothing and medical insurance) or weather financial setbacks. The expression "affordable housing" is also connected to the relationship between median incomes and market prices within a given community. Agencies such as the Metropolitan Council call a home affordable if a household earning up to 80 percent of median income can pay the mortgage spending no more than 30 percent of its income. For rental housing, it is an apartment affordable to a renter earning up to 50 percent of median income. These choices, 80 percent for ownership and 50 percent for rental, were picked because in most communities the private housing industry is unable to provide homes or apartments to populations at or below these incomes without some subsidy. Of course, a price set to be affordable to a household at one income level would not be affordable to lower income households. Accordingly a good deal of publicly subsidized "affordable housing" is still out of reach for thousands of families. See the table below for examples of wages and affordability thresholds for households 'at 80 %, 50% and 30% of area median income in the Twin Cities and Marshall County in Northwest Minnesota. Annual Income and Housing Payment Affordable for a Family of Four at 80%,50% and 30% of Area Median Income Income /Types of Jobs Amount Affordable M is / St. Paul Marshall County Metro Marshall Co. 80 % of median income $61,360 $34,720 $1360 rent $970 rent Construction Managers, Food Service Manager, $170,000 purchase $96,000 purchase Dental Hygenists Speci Education Teache 50% of median income $38,350 $21,700 $958 rent $606 rent Machine Tool Operators, Bus Drivers, Machine Tool $106,000 purchase $60,000 purchase Special Education Teachers Setters 30% of median income $23,000 $13,020 $575 rent $363 rent Receptionists, Preschool Farmworkers, Cashiers, Wait $64,000 purchase $36,000 purchase Teachers, Mail Clerks staff' The Dimensions of the Housing Challenge However affordable housing is defined, housing for a growing number of Minnesota families is unavailable or too costly. A number of factors have come together to create and exacerbate this situation: ♦ Population growth and housing demand has outpaced the housing supply, particularly the supply of housing affordable to low and moderate income households. ♦ Wages at lower levels have not kept pace with rising housing costs, and at the extreme, the wage- housing cost gap has led to rising homelessness. ♦ Low- income renters and homebuyers are vulnerable to discriminatory or unethical practices. Q Marshall County was selected as an example of incomes and affordability in Greater Minnesota. 5 HUD FY 2002 Section 8 Income Limits for Twin Cities & Marshall County. 6 Minnesota Department of Economic Security: Wage Estimates Updated to First Quarter 2002. Rent based on 3 0% of income. Purchase based on 21 % of gross income for principal/interest and 6.5 % 3 0 yr mortgage term. 2 ♦ Federal funding and tax incentives have been scaled back dramatically, and have not been replaced by local or private resources. Indeed, low and moderate income Minnesotans face a broad spectrum of housing challenges: some do not have resources to keep their homes in good repair, while others face living in homeless shelters or on the streets despite working full -time. The following statements provide some additional details describing the range of Minnesota's affordable housing challenge. Population growth and housing demand has outpaced the housing supply, particularly the supply of housing affordable to low and moderate income households. Between 1990 and 2000, the number of households in Minnesota grew by 15 percent, while the number of housing units rose only 12.4 percent. It is estimated that 3, 500 to 4, 000 new affordable units are needed in Greater Minnesota each year in excess of those produced annually. Within the Twin Cities metropolitan area, 17,500 units will be needed annually between 2000 -2030 to keep pace with the projected increase in population of almost one million Minnesota Population Growth vs. New Housing Units 600 500 400 300 200 100 Source: U.S. Census 2000 © Population Growth ®New Housing Units individuals." Currently, only 15,000 units are produced annually in the Metropolitan area." While vacancy rates for apartments are increasing, vacancies in the lowest rent ranges (under $600) are still tight. 12 Large families face additional barriers, as the vacancy rate for 3+ bedroom units, with monthly rents below $1,000, in many parts of the Twin Cities hovers around zero percent. 13 This supply problem is exacerbated because the areas of greatest job growth do not experience housing growth at a range of price levels. In these communities lower wage workers are unable to live close to employment. Rising land costs and community insistence on lower development densities lead to fewer homes being built overall, and units being built at higher price levels. The supply of existing affordable housing receiving public subsidy is also in danger of being lost through demolition or conversion to market rate rents. In the past few decades, many properties were financed with special low - interest mortgages through HUD, M11FA, and the U.S. Department of Agriculture (USDA). Often utilizing Section 8 subsidies, owners agreed to keep their buildings affordable for 20 years. After 20 years, owners have the option of prepaying the 8 "Minnesota Housing in 2000," Minnesota Planning State Demographic Center, August 2001. 9 "Facets of Housing Need," Greater MN Housing Fund, 1999. 10 "Blueprint 2030: New Regional Growth Forecasts," Metropolitan Council, 2002. 11 "Blueprint 2030: New Regional Growth Forecasts," Metropolitan Council, 2002. 12 "Apartment Trends: First Quarter Report," GVA Marquette Advisors, 2002. " See GVA Marquette Advisors, 2002. 1970's 1980's 1990's balance of their mortgage and raising rents to market levels. Approximately 50,000 units in Minnesota are currently receiving federal subsidy and are at risk of being lost to prepayment. Wages at lower levels have not kept pace with rising housing costs, and, at the extreme, the wage - housing cost gap has led to rising homelessness. While Minnesota has one of the highest homeownership rates in the nation (over 70 percent) homeownership is quickly moving beyond the reach of many Minnesotans. Between 1990 and 1999, the median home sales price increased by 61 percent, while the statewide median income increased by only 50 percent. 14 Costs of maintaining homes have outpaced incomes too. Low and moderate income Minnesotans who are in their own homes still face challenges in keeping their homes repaired as there is often little discretionary income for maintenance. Rents likewise have outpaced incomes in larger Minnesota communities. The average rent in the Twin Cities has increased 34 percent over the past 10 years, while. average renter household income has increased only percent. A typical two - bedroom a artment in Twin Cities Y 6 p Yp p rents for $916 per month. Forty -five percent of new jobs created in Minnesota p a Y wages f $11.17 per hour or less. 17 A g es worker earning this wage can afford to pay no more than $580 per month on housing. The fair market rent for a two - bedroom apartment in Minnesota is $727. A person working full time at p p g minimum wage ($5.15 per hour) would need to work 109 hours per week to afford the average two - bedroom apartment. 19 The gap between what people can afford to pay for housing and the cost of housing is a major cause of homelessness. Minnesota's homeless population continues to grow despite the state's economic prosperity over the last several years. The number of people sheltered in Minnesota has increased 17 percent since 1997. On a given day, 7,589 Minnesotans are homeless and an additional 13,740 are at imminent risk of losing their housing. Children make up 43 percent of the homeless population in Minnesota. In the year 2000, homeless children outnumbered Minnesota's entire homeless population in 1991. In spite of Minnesota's many shelter beds, over 1,000 individuals (nearly one -half are children) are turned away from shelters nightly because of lack of space. Increasingly, being employed does not necessarily mean an individual can afford a place to live. Approximately 41 percent of homeless adults in Minnesota are working and the proportion of 14 "Affordable Housing," Office of the Legislative Auditor MN, 2001. 15 See Legislative Auditor, 2001. 16 See GVA Marquette Advisors, 2002. 17 "Minnesota Employment Outlook to 2006," MN Department of Economic Security, 1999. 18 The fair market rent is an estimate by HUD of what the approximate average rent is for an area. 19 Out of Reach: America's Growing Wage -Rent Disparity," National Low Income Housing Coalition, 2001. 20 "Quarterly Shelter Survey," MN Department of Children, Families & Learning, 11/29/01. 21 "Minnesota Statewide Survey of People Without Shelter," Wilder Research Center, 2001. 22 See Wilder Research Center, 2001. 23 See Wilder Research Center, 2001. 24 See MN Department of Children, Families and Learning, 11/29/01. 0 homeless adults working full time has tripled since 1991, from 7.5 percent to 26 percent in 2000. Two- thirds of working homeless adults make between $6 and $9 per hour. Low - income renters and homebuyers are vulnerable to discriminatory or unethical practices. Reports of discriminatory practices in the housing market have been confirmed through audits, investigations by county and state authorities,. and successful litigation on behalf of people protected by fair housing laws. While most landlords are fair and operate within existing law, some landlords refuse to rent to people receiving public assistance, require high minimum incomes or costly application fees, and discriminate against racial and ethnic minorities, newcomers to this country, people with disabilities, and larger families or families with older children. These practices only add to the frustrations and difficulties facing renters. In the home buying market, prospective buyers still report being treated differently because of their race or nationality. 2 8 Predatory lending practices disproportionately affect elderly, low - income and minority homeowners. It is unclear whether discriminatory practices contribute to these disparities. However, people of color continue to trail white Minnesotans in the rate of- homeownership. Though 77 percent of white Minnesotans own their homes, homeownership rates for racial and ethnic minorities are significantly lower: 53 percent for Asians, 50 percent for American Indians, 43 percent for Latinos, and 32 percent for African Americans. Federal funding and tax incentives have been scaled back dramatically, and have not been replaced by local or private resources. The federal government has reduced its role in the production of affordable housing. With the 1986 Tax Act, the federal government reduced tax incentives for private investment in rental housing. The current federal budget for affordable housing production is less than one -third of what it was in the 1970s. There has been a shift from subsidizing housing production to subsidizing tenant rents through vouchers. But here, too, the federal government has not kept up with the increasing need for rental assistance. The State of Minnesota has been a national leader in its commitment to affordable housing. The state provides assistance for building, buying and maintaining ownership and rental housing, and also funds 25 See Wilder Research Center, 2001. 26 See Wilder Research Center, 2001. 27 "Regional Analysis of Impediments to Fair Housing," Legal Services Advocacy Project, 2001. 28 See Legal Services Advocacy Project, 2001. 29 U. S. Census 2000. 5 Minnesota Housing Finance Agency Appropriations, 1996 -2003 $173 Million $180 $160 $50M $140 $106 Million $120 $100 $77 Million $2425 $850K $80 $47 Million $14M $60 $80.414M $40 - $63M: $79.664M $47M; $ �.:•.:• = :�:= :•.::: �::: �:� �.•:::� :•:: �: .:•:•:::•:: 1996 -1997 1998 -1999 2000 -2001 2002 -2003 O TA N F (one -time) Appropriations ® General Funds (one -time) © Base 25 See Wilder Research Center, 2001. 26 See Wilder Research Center, 2001. 27 "Regional Analysis of Impediments to Fair Housing," Legal Services Advocacy Project, 2001. 28 See Legal Services Advocacy Project, 2001. 29 U. S. Census 2000. 5 housing related services. However, the state investment declined from the high point of $173 million reached in the 2000- 01 biennium to $106 million appropriated in 2002 - 2003. (See chart revious a e. p p g ) With the projected budget deficit, securing additional state funding for housing will be challenging. At the local level, community leaders are recognizing the integral role that affordable housing plays in maintaining healthy towns and neighborhoods. Mayors of both Minneapolis and St. Paul have identified affordable housing as a top priority and have unveiled plans to address the shortage in their respective cities. The Metropolitan Council is promoting affordable housing through the Livable Communities program and regional planning. The council also supports the Mayors Regional Housing Task Force, which has taken a leadership role in promoting affordable housing across the metro area. Many Greater Minnesota local governments are seeking ways to promote affordable housing in their communities. One notable effort is the collaborative work by five St. Cloud area communities to develop consistent local policies to promote affordable housing. Local business leaders have also cited housing as a top concern and are taking action to alleviate the problem. Some examples of business investment include: Hormel Foods contribution of $2.45 million to build 132 units of affordable housing in Austin Minnesota; Polaris Industries' and Marvin Windows' contribution to the Roseau County Affordable Housing Loan Pool, which provides down payment assistance to local homebuyers; and, the Mayo Clinic's significant lead contribution of $7 million to the Rochester area "First Homes" affordable housing initiative. Minnesota's private foundations have been in the forefront in addressing the affordable housing challenge. The McKnight Foundation has been the leader and major investor in the state's two housing funds: Family Housing Fund (serving the Twin Cities) and Greater Minnesota Housing Fund. Other significant contributors include Blandin Foundation, Otto Bremer, Minneapolis Foundation, and the Greater Twin Cities United Way. As important as they are, all of these investments at the state and local level do not equal the reduction in federal investment formerly available in Minnesota and do not come close to providing the housing resources needed. Solutions: encourage, invest and protect to address the need The following three basic strategies provide an example framework for a comprehensive housing plan. First, encourage development of all types and prices of housing; second, invest in housing or housing subsidies to help those who cannot afford market rate housing; and third, strengthen the rights of those most at risk of becoming homeless or facing discrimination due to the lack of adequate affordable housing. 30 This figure does not include the $16.2 million in general obligation bonding appropriated for homeless veterans projects in Hennepin County and St. Cloud during the 2002 Legislative Session. This allocation was substantially greater than the general obligation bonding commitments for housing in past biennia. The Williston Group, 2001. rel Encourage development o,�affordable housing. Several strategies have proven effective in encouraging the production of affordable and market rate housing. Regulations such as building codes, zoning and subdivision ordinances, and land use policies serve important public purposes. However, these regulations add to the cost of producing housing. Because many regulations come from the local level, some communities have used them to discourage certain types of housing in an area, or prevent certain people from moving into a community. Streamlining regulations can assist in reducing both the cost of producing housing and community resistance to affordable housing. Flexible zoning can be effective in encouraging the private sector to provide mixed income housing. Communities could identify tracts of land eligible for higher density housing. New building codes could be developed to facilitate rehabilitation of older properties. Reducing taxes is another strategy that may be used . to encourage affordable housing development. Much has already been done. As a result of the property tax reform enacted in 2001, Minnesota's i apartment tax rate has " fallen from 7th hi � hest among all states for taxes payable n 2000, to 27 h highest for taxes payable in 2004. 3 Invest in a broad range o f f 'housing strategie meeting the while meeti the basic housing needs o� f those with the - fewest housing choices. Cost reduction strategies can assist developers in producing affordable housing, but in order to meet the housing needs of low - income individuals, additional investment in affordable housing will be needed. Housing funding currently comes from local, state, and federal government, philanthropic organizations, and businesses. In general terms, affordable housing investment has three major components: rent subsidies for very low income households; funds for repairs and preserving existing affordable rental and ownership housing; and funds to build new rental and ownership housing scaled to available wages. Additionally, an increased investment in health and social services connected to affordable housing will assist in stabilizing people in the community. Beyond the housing already being provided annually by the private market and current public and charitable resources, there are an additional 70,000 very low income households needing rent subsidies, 29,000 owner occupied and rental units needing rehabilitation and 8,000 affordable units needing construction. In current dollars, this requires an additional annual commitment of $850 million in public and /or charitable investment in new "gap" (non debt) financing. 32 Report issued by Jeff Van Wychen, Independent Consultant, 2002. 33 Minnesota Housing Partnership's calculations based on reports produced by Family Housing Fund (Workforce Housing: the Key to Ongoing Regional Prosperity), Greater Minnesota Housing Fund (unpublished 1998 report), North Metro Mayors Association (Older Housing in the Twin Cities Metropolitan Area: The Forgotten Issue), and M1-1FA (Consolidated Plan 2001 -2005, and board reports). Protect the rights of those most vulnerable. , Strengthening and enforcing the rights of people affected by the lack of affordable housing is one method of protecting individuals while longer term regulatory and investment strategies are developed and implemented. Aggressively enforcing fair housing laws, reforming rental practices that restrict housing choices for low- income renters (such as multiple application fees and unfair screening practices), and minimizing the impact of past rental difficulties are all actions which should be considered to help renters deal with the current lack of housing. Conclusion Many challenges lie ahead in developing a comprehensive plan to meet Minnesota's housing needs. No single method will solve this crisis. Instead a number of strategies should be pursued to encourage development, invest in housing and protect low - income renters and homeowners. These strategies should be pursued if Minnesota is to reverse a trend that threatens the stability of tens of thousands of families and the economic vitality of both individual communities and the entire state. These strategies are needed so that other investments in community infrastructure, education, community health, and welfare -to -work programs are not wasted. Without adequate housing, families will fail in their struggle to move forward, and the state as a whole will be less economically. viable. After the 2002 elections it will be up to the governor and legislature to provide bold leadership in a comprehensive response to the housing challenges described in this paper. Many in our communities -- those in business, labor, faith communities, local government, and charitable institutions -- are ready to take action on strategies that provide a meaningful response to the magnitude of the housing challenges facing Minnesota. The purpose of this primer is to provide a general overview of housing issues in Minnesota. Although comprehensive, the primer does not capture all facets of the housing challenges facing this state. HousingMinnesota invites you to provide your feedback, comments and suggestions about this primer. Feedback will be posted on the HousingMinnesota website at www. housingminnesota..org: Please email your feedback to Donald McFarland, HousingMinnesota Lead Collaborative Organizer, at dmcfarlandAmhponline. orb, and also let him know if you prefer to remain anonymous. a Attachment 3 March 28, 2003 HousingMinnesota Homes For All By 2012 What is Affordable Housing? Housing is considered affordable if it constitutes 30% or less of a household's gross income. Generally, when households spend more than 30% of their income to meet housing costs, they do not have enough income to meet other basic needs or weather financial setbacks. Why is There a Problem? Housing is not available and affordable to increasing numbers of Minnesotans. Low - income households and, increasingly, moderate - income households are affected by home prices and rents that have outpaced inflation and wages. How Can We Solve the Affordable Housing Crisis? Encourage development of all types and prices of housing. Invest in housing or housing subsidies to help those who cannot afford market rate housing. Strengthen the rights of those most at risk of becoming homeless or facing discrimination due to the lack of adequate affordable housing. (visit www.HousingMinnesota.org for more information on affordable housing issues and solutions.) Affordable Housing in Ramsey County Lower Income Households Face Extreme Affordability Challenges The following table illustrates that households at the lowest income levels pay more of their income on housing costs than households at higher income levels.' The number and percent of households within various income brackets that pay over 30% of household income on rental and ownership costs are shown below. According to the 2000 U.S. Census, the median household income for Ramsey County is $45,722. Ramsey County Housing Costs Rental Homeownership ♦ Between 1990 and 2000 rents ♦ Between 1990 and 2000 home rose 26% while incomes grew values rose 23% while incomes 10°/x. rose 10°/x. ♦ A household would need to ♦ A household would need to earn $36,480 to afford the fair earn $41,243 to afford the market rent for a two bedroom median valued home apartment ($912/mo). ($126,400). ♦ Approximately 38% of renters in Approximately 17% of Ramsey County pay over 30% homeowners in Ramsey County of their household income on pay over 30% of their household housing, and 18% of renters pay income on housing, and 5% over 50 %. pay over 50 %. ♦ A minimum wage worker would need to work 136 hours per week to afford Ramsey County's fair market rent.$ Homelessness in Ramsey County The gap between what people can afford and the cost of housing is a major cause of homelessness. Forty -one percent (41%) of all adults experiencing homelessness in Minnesota report income from .work. The proportion working full time has tripled from 7.5% in 1991, to 26% in 2000. A one -day survey of people experiencing homelessness in Minnesota. estimates that 8,596 Minnesotans are homeless and an additional 12,733 are at imminent risk of losing their housing.1' Children make up 43% of Minnesota's homeless population.12 ♦ On May 30th, 2002, 1357 people were sheltered in Ramsey County, and an additional 72 people were turned away because the shelters were full. 44.2% of surveyed adults experiencing homelessness in the Metro Region are employed. ♦ Of the adults experiencing homelessness who report being employed, 66.5% are employed full time. Other Important Ramsey County Housing Facts ♦ 63% of Ramsey County residents own their homes and 37% are renters. ♦ Approximately 65% of the homes in Ramsey County are over 40 years old. ♦' Overall, 10.6% of Ramsey County residents and 15.7% of children under age 18 live in poverty.l$ ♦ Ramsey County's population increased by 5.2% between 1990 and 2000. ♦ Although the overall vacancy rate in the Twin Cities Metropolitan area has risen from 4.0% to 6.6% in the last year, the need for affordable housing remains significant. Vacancy rates for the lowest rent ranges (under $600) are closer to 4 %, while vacancies for the highest rent ranges (over $1,300) are over 9 %. Sources: 1 Data source for information in table is the 2000 U.S. Census ♦ 2 U.S. Census 1990 & 2000 ♦ 3 "Home Values" calculated from data on arms length sales from Minnesota Department of Revenue, Property Tax division; Income values calculated from the 1990 & 2000 U.S. Census ♦ 4 U..-S. Department of Housing and Urban Development (HUD) 2003 Fair Market Rents♦ 5 Calculated using U.S. Census 2000 Ramsey County median home value based on 5% down payment, 21% of gross income for principal /interest and 6% 360 month mortgage term ♦ 6 U.S. Census 2000 ♦ 7 U.S. Census 2000 ♦ 8 National Low Income Housing Coalition's "Rental Housing for America's Poor Families: Farther Out of Reach Than Ever, 2002" ♦.9 "Minnesota Statewide Survey of People Without Shelter," Wilder Research Center, 2001 ♦ 10 Wilder Research Center 2001 ♦ 11 Wilder Research Center 2001 ♦ 12 Wilder Research Center 2001 ♦ 13 "Quarterly Shelter Survey," Minnesota Department of Children Families and Learning, May 2002 ♦ 14 Wilder Research Center 2001 ♦ 15 Wild er Res ea rc h Center 2001 ♦ 16 U.S. Census 2000 ♦ 17 U.S. Census 2000 ♦ 18 U.S. Census 2000. The poverty threshold for a family of three is $15,020. ♦ 19 U.S. Census 1990& 2000 ♦ "Apartment Trends" GVA Marquette Advisors, Fourth Quarter 2002. For more information about this fact sheet or the HousingMinnesota campaign, contact Donald McFarland at 651- 649 -1710 x122, or email dmcfarlandgmhponline.org or visit our website at www.housingminnesota.org Attachment 3 —A H J m a 0 0 LL LL a 0 z 00IM06% —" N O O ON Z D" O L) W tl� P OO 1; L � � cY) (Y) 00 t� Lo Co O_ 00 q N q O M y... L O O o � 4� O 0 4 - �" O r d' 07 CO Co O P� M r t` d' LO i� d' � 0 � v 11 " d. w V I L � O -O �•• 1` E dN' Co 0 O d' W d' �- N M T- C0 r M LO O 00 M M O d' 00 N O t1' O v- 40 r d' N 00 P-- r--. r*-_ Co - 0) r� O CO O Z Vi . V -:, .Ln N N N 0 M N r Ln O j N o TM M r M M 07 N �- r 00 N O Nu M O M O N �- M E 40 p vl L � •+ �' E O r 00 O N r M M LO 0 N 0 C0 LO M r r d' CO M 0 M CY) N M M r r r r r Z O vi N :C \ Cn Cn � cu co 3: C :3 0) .— V -- CO a) a) a) 0 0 CU � J _ O. Cu O O O O O .�; � ..0 Q LL J Z Z Z � Cl) > Attachment 3 —B SUMMARY OF UNIT -BASED AND TENANT -BASED ASSISTANCE City of Saint Paul and Suburban Ramsey County November 2002 City Units with Unit -based Assistance' Households Receiving Tenant -based Assistance Total Unit -based Units and Tenant - based Assisted Households Saint Paul 11,179 3 14 Arden Hills 43 16 59 Blaine 1 1 Falcon Heights 66 13 79 Gem Lake Lauderdale 10 10 Little Canada 120 149 269 Maplewood 891 355 1 Mounds View 187 109 296 New Brighton 523 206 729 North Oaks North St. Paul 426 128 554 Roseville 370 140 510 Shoreview 91 59 150 Spring Lake Park St. Anthony adnais Heights 100 53 153 White Bear Lake 295 184 479 White Bear Twp 60 8 68 Suburban Ramsey County 3 1 4 Total Saint Paul and Suburban Ramsey County 14,351 5 19,553 1 Unit -based units included in this Inventory receive some program funding with a requirement that the rent is affordable. a Tenant -based assistance includes Section 8 certificates and vouchers and other forms of assistance administered by the Metro HRA and the Saint Paul PHA, such as Rental Assistance for Family Stabilization (RAFS), Bridges, and other programs as of November 2002. Background and Summary Tables Inventory of Assisted Rental Housing - Saint Paul and Suburban Ramsey County HousingLink, November 2002 (030703) Page 4 .,MAY - 13--2003 15:31 RAMSEY COUNTY MANAGER FOSS -lr I-aX We Co./Dept, he BI 3 Phone # HOUSINGLINK Overview of Three Common Aftrdabl' Fax # L s PUBLIC HOUSING 1 q VIY4 M1 CA h Attachment 3-C Co. Phone Fax # What it is What It offers What to be prepared for -.0., Mot. What it costs Pubftcl owned and Ver affordable rents, the rent *Waitin lists at a housin Most units cost 30% mana renal units for y ou pa is based on y our authorit can be closed or lon of household's low•income households. A income, *Some units are older and come ad g ross 0, Some units are reserved *Variet of housin st with few amenities. income. * onl for those who are elderl or disabled (sin apar=ent, * If y ou don't like the unit(s) *Some units have a around a lot to find out wh9se townhomes) and arnenitfas, offered, y ou ma have limited low, fixed rent Subsid t pro (the Your local housin authorit choices, amount. subsidy,sta with the unit) serves as y our access point, ... ....... . 0iihad D g (pnnO. an y sm g . ry of &�dimd ffo d Ho Refe Service 8 HOUSING CHOICE VOUCHERS often for a lar number of . SECTION What it is ' What it offers units. What it costs Government funded Check out Housin List Status Report e DirectE Director of Subsidized Housin (rfn�, MISP), and Hour ReSeral Service ffRS I PROJECT-BASED SECTION 8 HOUSING = What it is What it offers - -What to be prepared* for What it costs Privatel owned and # Ver affordable rents, I - Each owner keeps a separate I Most units have a mana rental units for . a Variet of housin st waitin list, low, rLxed rent low-income households. (sin apartment, *Waitin lists at properties can be amount. e Some units are reserved townhomes) and amenities, closed or lon 9 Some units cost . onl y for those who are elderl or disabled, a Man different landlords and * You ma have to call or travel 309 of mana around a lot to find out wh9se household s Subsid t pro base d (the participate, waitin list is open and how to ad g ross subsid § ta y s 'with the unit) I appl income, Check out HouiingLaks 0iihad D g (pnnO. an y sm g . ry of &�dimd ffo d Ho Refe Service 8 HOUSING CHOICE VOUCHERS . SECTION What it is ' What it offers What to be prepared Kb_r­ What it costs Government funded a Ver affordable rents the rent *First, y ou will need to appl at an 3no to 40% of program that helps low y ou pa is based on y our administeftng a to g et a U a hold's ad - --ho s justed income households pa the income. voucher, g ross income. rent on market-rate rental * Flexibilit You g ot to c hoose 1p Waitin lists for vouchers can be Unit& the apartment y ou want to closed or lon The tenant finds his/her rent (and you -m2Y riot even 9 Once y ou have a voucher, y ou own unit (within certain re I quirements), and the have to move, if y our current sLill have to appl at the propert housin authorit pa a propert will accept the vo ticher) to rent a unit— which will portion of the rent I probabl re a credit and directl to the property 0 Usuall y ou can y our keep I -iistor check. on behalf of the tenant, subsid if y ou decide to Some properties ma choose not move, to accept vouchers, Subsid t tnant.based (the " The i4nit y ou find must pass * The administerin housin subsidy sta with the tenant) an inspection before the authorit will help identif an subsid pa can start, I eligible rent amount. C out Housin Waitin List Status Report, (WL5X, Online Dkecm Dkwrar of Rent and Income SprrOjc Rental Pmperties �Hno, and 14o et ernal savico (HRS) Example of rent at 30% of income- Hm5ehold with one ruldr-ne worker ac $1. 1 S/haur'mi pa $260 per month. www.housinglink.org Cop 2002 TOTAL P. 01 Attachment 4 —A CD O p er. 0 to O Cr N • 00 N 0 Ln 00 N 0 O O O 0 S < C!) - v (n v, =r CD 2 -p O �' —• V1 ? sv N — v CD < 2) ,� CD CL CD p- CD 0 CD �, CD CD CD 0 O CD p O O =3 _ C/ ' CL p cL r C ' p CD m CD CD ' CD CD CD .tom Ul j - 4 cn v CO oo w 00 j W N O 00 O -I N N Cn Z -J W O N CO Ln O -� 00 -P -CD W 0) W W W N : * t ►:: W C Ln W -P► C O C j1 ONO J::* •'D 00 -4 Ln O O CO 00 -4 N :;. . CO 4b6 Co O U1 -I N O -p► CO 00 Ln Co CO N W :4. N 00 CJ1 C31 00 N CO 00 -P W 00 O CO O O CO O O CO U1 0 0 0 0 0 0 0 0 0 0 0 0 0 : =Z2: ................. ................. ................. .................. O CO 0) N O W Ln CO O O W O : -4 N W �4 CO 61 C31 N Ln N c0 O Ln 00 --.v N N W -4 00 CO W 00 N U1 a\ a \ o 0 \\ o \ o 00 .p O N CO --I O N Ln T . •41 -P 00 C n CO -1 U1 Oo O w Cn O C31 CO O W O O CO Ln Oo O w \° \ \° \ \° \ \ \ \° \ o o \ 0 0 0 0 0 0 0 0 0 0 0 0 0 4 MAY -0? -2003 13:25 RAMEEY COUNTY MANAGER y r Attachment 4 -B Results Pa 1 of 1 1 h"- / /Vvww hnI16- nalinlr R" I . re w— Ruin+ -fit Ic /PyI M TOTAL P.03 New Swch C hoosing A Place To Live /Positive Changes Search Results 01 HOUS INGLINK contact �4. now 1 Click on the un derlined column header to sar t the res uft by tot infoMatlo Results 1 -7 of 7 displayed F i Number of Residence Hou Name Address County S,edrooms Program Type Ty `Archer 1616 c Fed• R.affne 1 Bdfrn - 99 units Section 8 Project Based Apafe Faffilly. Nkla, wpiewwood, mN m 09 2 Bdrm - 83 units * Section 236 A 3 Sir►n - 6 units DISO E Ew .Ca 1801 rwais Ave Fiarn3ey 1 Bdrm - 56 units * ScKgon 5 V ouche r . Apartment Elderly +att�1 & Maplewood, MN 55109 2 Bdrm � 1 units * Section 42 * _... ._ . Eno � es (651) 770-7687 3 Srn1- 58 Units mss$ 40 Ma Pig W_ a - +� Concordia 2030 E. Lydia Ramsey I Bdrm -124 units ` Section 8 i;4Mect Based Apartment Elyderty AfTx1S MaplewoW, MN 55109 Sedan 20 (651) 776 - 0402 l ire Ktell 1_..I. ..�.._.._....... 1880 Mesabi Ave. Ramsey 1 Bdrm - 6 units �' Section 8 t Eel Singie Family Fawy 'T.�wn i7►�rne� Maplewood, MIS 66'109 2 Edrm - units 'townhouse es � .....' . 3 Edrm - 20 uNts 01=bif (6 5 1) 7'70 - 9059 Eldedy Maplewood 410460 S- M+ night Rsrhssy 2 Sdrrn -13 un its ' Se io'n 8 Project Based ap artment Family, Gardens Rd. 3 Bdrin -16 units Aws MeplewoW MN 5511 disable Eid" (507) 451 - 8524 .MWJq ' 2461 N Aries Strad Ramsey 2 Dd - 16 units + Section 8 Voucher Townhouse Family. Townhomes Mepiewaod, MN 55109 3 8drm - 16 urits Eectlon 42 Ages (61 2) 341 - 7800 V111ake On 2120 -2124 Woodlynn Ramey 1 Bdrm - 26 units * Sectkm 6 Voucher Elderly Vlfbo d Ave 2 Bdrm - 34 units * Section 42 McPi, MN ; Chris dd (661)779-9448 Results Pa 1 of 1 1 h"- / /Vvww hnI16- nalinlr R" I . re w— Ruin+ -fit Ic /PyI M TOTAL P.03 MAY -07 -2003 13 :24 RAMSEY COUNTY MANAGED Prowr#ies with Unit B Assistance - Maplewood 12 Total Units Affordallo Ul0 Carefree Cottages 240 214 Emma's Plate 13 13 Family Service Center 21 21 Golden Star .106 54 Maple Knoll 57 57 Maple Pond leg 168 Maplewood Gardens 29 29 Maplewood Townhomi 31 31 Park Edge 61 5o VadnaLs Highlands 35 35 Village of Woodly 59 36 Total Existing 610 708 Attachment 4 -C RC RC RC RC Rehab RC RG Rehab Proposed Sibley Cove 80 40 RC Van Dyke Street 24 18 RC (This may have changed) Attachment 5 Owner-OccuDied Versus Renter-Occupjgd Housina Units Maplewood has a higher than averse percentage of owner -occu i ' 9 , P 9 p ed housing units than in the Metro Area or in other inner -ring suburbs. In 1980, 74 percent of the units were owner- occupied, down from 79 percent in 1970. The 1994 Census showed a decrease to 72 percent from the 74 percent in 1980 in the percentage of home ownership. Housing The price and rent of Maplewood housing is only slightly above the metropolitan. mean and median. There also is a diversity of styles and price ranges. Older homes on smaller lots provide opportunities for first -time buyers in the Western Hills, Parkside and Gladstone neighborhoods. Opportunities for low- and moderate - income households are available in manufactured home parks and in a variety f es a � types and locations of multiple dwellings. The move -up housing market is strong with these . .choices available throughout the. City. Buyers can find more expensive housing in the Hillside, Vista Hills, Highwood and Kohiman Lake neighborhoods. g oods. Housing Assistance Maplewood participates in several programs that assist households in the City. The Metropolitan Housing and Redevelopment Authority manages the Rehabilitation Loan Program, the Section 8 and Section 236 Rental Assistance Programs. In 1997, the Section 8 Rent Assistance Program helped 203 households 61 senior and 142 family), which represents a small portion of the low - income households livin in Maplewood. This program does n e P p g of come close to meeting the need for affordable housing in Maplewood or elsewhere. This is because the Federal Government has reduced levels of funding annually throughout the 1980s. Moreover, in the 1990s, many long -term Federal contracts with landlords for the set -aside of units used in this program may be prepaid by the owners. As such, many affordable units were. lost. In addition to the individual system of vouchers, there are four complexes rovidin P 9 subsidized housing for families and the elderly: Maple Ponds (formerly Archer Heights), 1816 and 1854 Beebe Road; Maplewood Gardens, 410 South McKnight ht Road; Maple Knolls 1880 Mesabi g P ab� Road (south of Radatz between White Bear Avenue and Southlawn Drive); and Concordia Arms, 2030 Lydia Avenue. Information on the current number and type of subsidized housing units - is shown on the accompanying Tables 11 and 12 on page 57. Maplewood participates in several loan programs funded by the Minnesota Housin Finance Agency and managed b I a 9 Y g y l ocal lenders. These include the Great Minnesota Fix -up Fund, the Home Energy Loan Program, the MHFA Single -Famil Mortgage. Y Loan Program, the Home Ownership Assistance Fund, the Purchase Plus Program and the Urban Indian Housing Program. 55 Maplewood also provided money for several years in the 1990s to the Share -a -Home program managed by Lutheran Social Services. This program matched individuals looking for an inexpensive place to live with elderly homeowners who need help to remain in their homes. DevelopmentOrcrinances The Maplewood Zoning Ordinance includes seven districts which permit single-family 9 Y detached housing. The minimum lot areas range from 7,500 to 40,000 square feet. The R -2 district also allows two- family dwellings, and the R -3 district permits multi- family developments ranging upwards from four units per acre. In recent years, the City has adopted many ordinances that affect development and housing.. These include a Shoreland Overlay District to protect shoreland areas, an Environmental Protection Ordinance to protect areas of significant natural features (includin wetlands and large trees), a pipeline setback ordinance to protect buildings from pipeline leaks, - -and a housing maintenance code. The City also has a "truth -in- housing" ordinance. Maplewood intends this ordinance to help purchasers make an informed buying decision. This ordinance also ma promote privately negotiated Y P P Y g ted housing repairs at the time of sale. The City requires sellers to have a housing disclosure report done that discloses information about the condition of the property, and highlight any potential repair needs or housing code deficiencies. New Housing The addition of more than 2,100 housing units from January 1990 through June 1998 increased the supply of housing by 18 percent. Still, about 8 percent of the land planned for residential use remains undeveloped, providing areas for continuing new construction in the coming years. Much of this land is in the City's southern "le ." The undeveloped land is the reason the Metropolitan Council projects a population increase of 4 percent between 2000 and 2020. This compares with a 0.8 P ercent growth rate. for all inner -ring suburbs. As development continues, though, the available land will be increasingly difficult to develop because of constraints, such as a lack of city sewer and water, steep slopes,' Pe s, poor soils, or wetlands.. The challenge for the City will be to continue to allow for the development of a range of housing options for its citizens on the undeveloped sites. Expected Houaing Trends In recent years, the Metropolitan Council has produced several studies examining potential changes in the region's demographics and what these changes might mean for the housing market. This research suggests that major changes in the composition of the- population will affect the nation and the state over the next ten to thirty years. These changes will also affect the Twin Cities and Maplewood. 56 TABLE 11 SUBSIDIZED HOUSING UNITS, 1990 Community Privately Public Housing: Owned Housing: Certificates and Vouchers Total Subsidized Units. Concordia Mixed Elderly Total Mixed Elderly Total Mixed Elderly Total Mixed - Elder!y Total Maplewood 207 193 . 400 144 36 180 351 229 580 Ramsey County 1,630 2,594 4,224 3,345 2,5.11 5,856 2,371 982 3 7 6,087 13,433 Metro Area 3,508 8,554 .12,062 10,731 9,663 20,394 8,156 3, 154 11,310 22,995 21,371 44,366 Source: "Changes in the Subsidized Housing Market in the Twin Cities Three Bedroom 6 16 20 -- 42 Handicapped Metropolitan Area., 1980 - 1989," Twin Cities Metropolitan Council _ . _ TABLE 12 SECTION 8 AND SECTION 236 UNITS Tyge of Unit Maple Pond Homes Concordia Arms Village on Woodlvnn _Totals El�y Units One Bedroom 69 124 20 213 Two Bedroom 60 60 Source: City of Maplewood, 1998, 1999 57 Maple Maplewood Maple Concordia T e of Unit Pond Homes Gardens Knolls Arms Totals F. a Units One. Bedroom 30 — 5 M 3 35 5 Two Bedroom- 63 13 32 -- 1 Three Bedroom 6 16 20 -- 42 Handicapped -- _ . _ 9 29 57 — 185 Tyge of Unit Maple Pond Homes Concordia Arms Village on Woodlvnn _Totals El�y Units One Bedroom 69 124 20 213 Two Bedroom 60 60 Source: City of Maplewood, 1998, 1999 57 The large group of baby. boomers, born between 1946 and 1965, sharply boosted housing production during the 1970s and 1980s as they formed new households. A generation has followed the baby boomers that is smaller in numbers. As these two groups move through their life cycles, they will change the housing. market. Some changes may include the following: • There may be less demand for rental housing as the typical renter age group moves into owner - occupied structures. On the other hand, the elderly may be looking y y ok g to move from owner - occupied units to rental units. This may offset the decline in non - elderly rentals. • Household composition has shifted.. The U.S. Census Bureau estimates. that.. between 1985 and 2000, 69 percent of the growth in new households will be in nontraditional households. Almost 14 percent will be in female, single- parent families whose median income is less than half the regional median. Of these, more than 30 percent will be living in poverty. This may not only affect the housing market, but may also place a greater strain on the public to provide more affordable housing options. • There may be less subsidized housing. The changing household structure is occurring when the future of much of the region's subsidized housing is unclear. During the 1990s, more than 5,000 contracts for subsidized units between the federal government and investment housing owners expired. The Federal government did not replace many of these contracts. • Rehabilitation needs may increase. The Metropolitan Council estimates.that by 2000, 30 percent of Maplewood housing. stock will be more than 40 years old and 6 percent will be more than 60 years old. As the housing stock continues to age, residential properties will need more repairs and maintenance. • The need for elderly housing is increasing and may increase sharply as the baby boomers begin to reach their 60s, starting after 2006 and peaking after 2025. Between 2000 and 2020, the Met :Council estimates that the regional P o P ulation will grow by 15 percent and the baby boomers wily be between ages 54 and 74. Additionally, the percentage of young adults in the region will decrease by the year .2020. Maplewood and the developing suburbs will continue to grow, although slower than the previous decade. This is because the number of annual housing starts will be less than half of what it was in the 1980s and 1990s. By 2010, the baby boomers will be between the ages of 45 and 64 and their children will be entering the housing market. Growth in Maplewood and the developing suburbs may continue to slow and some may experience problems similar to those now faced by the central cities. It may become more difficult to sell a home, and buyers may have many more affordable choices. Baby boomers may force the housing market to produce more and better housing for this group. 58 LIVABLE,COMMUNITIES ACT On November 13, 1995, the Maplewood. City Council adopted a resolution to participate in the Metropolitan Livable Communities Act.. This act requires the participating communities to adopt housing agreements and to set an action plan for housing activities. A major focus of the Livable Communities Act is to promote the development and preservation of affordable and life -cycle housing throughout the metropolitan area. The Metropolitan Council considers affordable housing to be housing that costs no more than 30 percent of a family's income. In 2000, an owner - occupied housing unit could cost up to $134,250 for the Metropolitan Council to consider it affordable. For rental properties to be affordable in 2000, the rents could be up to $616 a month for a one - bedroom unit and up to $760 per month for.a two - bedroom unit. HOUSING ISSUES The following are City housing issues: • What steps, if any, should the City and its Housing and Redevelopment Authority take to increase the amount of affordable housing? • Is the City planning enough - land for alternative housing types? If not, what changes should the City make? • What steps can the City take to prevent the deterioration or abandonment of its older housing stock? • What steps. can the City take to prevent neighborhoods from deteriorating? • What strategies can the City develop to encourage developers to build a_variety of housing styles and types in both new developments and infiil development projects? • Are there adequate services and facilities within each neighborhood to meet eet the needs of existing and. planned populations? • How can the City preserve some of its natural features and beauty as the community grows? • Will future housing meet the needs of the increasing number of.nontraditional households, particularly single- parent families? 59 HOUSING GOALS AND POLICIES GENERAL HOUSING GOALS . The following are general housing goals in Maplewood: • Have a balanced housing supply, with housin available for people 9 at all income levels. • Accommodate all racial and ethnic groups in the purchase, sale, rental and location of housing in the City. • Have a variety of housing types for ownership and rental for people in all stages of the .life-cycle. � Have a community of well- maintained housing and neighborhoods, .including ownership and rental housing. • Promote housing development that respects the natural environment of the City while striving to meet the need for . a variety of housing types and costs. • Promote the availability of a full range of services and facilities for its residents, and the improvement of access to and linkage between ' - g en housing and employment. • Add to and preserve the affordable housin in the City. ty• Maplewood will make its best effort, given market conditions and resource availability, to maintain a City - housing index within the benchmark ranges for affordability, life -cycle and density. Specifically, the City will strive to meet the following housing benchmarks: • At least 69 percent of - ownership and 35 ercent of the rental ' p housing as affordable. • At least 29 percent of the housing as units other than single-family -detached. • An owner /renter housing mix of 76 percent owner occupied and 24 p ercent occupied by renters. • Have single - family detached houses with an average density of 3 units per acre and multifamily housing with an average density of at least 10 units per acre. 60 Housing Affordability Housing costs continue to rise throughout the region for a variety ty of reasons. These include increasing land and construction costs, utilities and taxes declines. ' eclines. in government aid programs and, indirectly, land use regulations. These cost increase greatly affect low -and moderate - income households. s Changes in mortgage interest rates also affect the affordability of housing. The Metropolitan Council set a goal that at least 69 percent of the ownership housing and at least 35 percent of the rental housing in Maplewood should be affordable. As of 1999, the City was exceeding both minimum benchmarks. The City wilt continue to try to meet or exceed these goals with the following policies and activities: Financing . • The City, through its Housin 9 and Redevelopment will explore all . p t Authority, wi avenues for financing affordable housing, - : includin . 9 9 - Use of tax- exempt and tax- increment financing, - Programs, including rants, loans and federal ' 9 tax credits, for housing assistance, development and rehabilitation. The Minnesota Housing Finance Agency has the follow' . 9 Y following programs: . Minnesota Mortgage Program Homeownership Assistance Fund Purchase Plus Program Partnership for Affordable Housing Entry Cost Homeownership Program (ECHO) Low Income Housing Tax Credit Program New Construction Tax Credit Mortgage /Builders Loans Low and Moderate Income Rental Program Deferred Loan Program Revolving Loan Program. Great Minnesota Fix -Up Fund Mortgage Revenue Bonds Mortgage Credit Certificates (MCCs) - . Programs available through the U.S. Department of Housing and Urban Development. These include: Section 8 Rental Vouchers and Certificates Home Investment Partnership Program. (HOME) Section 202 - elderly Section 811 - handicapped 61 Programs and funds available through the Metropolitan ' Hous.in and Redevelopment Authori g P tyand through the Metropolitan Council's Livable Cofimunities Act. Community Development Block Grants .and other programs through Ramsey County. 9 g Maplewood already participates in several of the P above - listed programs with the other government agencies and with developers. . P Rental Assistance • The City, through the. HRA, will continue to participate in rental assistance programs, including those available through the Metropolitan HRA and the federal government. Energy Efficienc • The City will promote energy fficient improvements ' Y p al! types of housing . units to help keep them affordable. Maplewood will provide information and, when available, financial help for both owner-occupied and rental units. HOUSING DIVERSITY Most of Maplewood's housing is single- family homes. The Metro olitan Coun goal calling for � p cil has a 9 g each community to provide 41 percent of its housing stock in housin types other than single-family homes. From 1 g . 9. lt in Maplewood were not single-family Y 990 through June 1998, 33 percent of the housing units built homes. The City w Y ty 11 continue to work toward this goal with the following general policy: Y • Promote a variety of ' housin es costs and" o - options 9 tyP wnersh�p throughout the City. These are to meet the life -cycle needs of all income levels, those with special needs and non - traditional households. The City also adopts the following specific housing diversity policies: Land Use Plan- Maplewood will continue to provide dispersed locations for a diversity of housing styles, types and price- ranges through its land use plan. 62 '�; _ � sue' g� About ULI -the Urban Lane) Institute ULI —the Urban Land Institute is a non- profit education and research institute that is supported by its members. Its mis- sion is to provide responsible leadership in the use of land in order to enhance the total environment. ULI sponsors education programs and forums to encourage an open international exchange of ideas and sharing of experi- ences; initiates research that anticipates emerging land use trends and issues and proposes creative solutions based on that research; provides advisory services; and publishes a wide variety of materials to disseminate information on land use and development. Established in 1936, the Institute today has more than 17,000 members and associates from some 60 countries representing the entire spec- trum of the land use and development disciplines. Richard M. Rosan President Recommended bibliographic listing: Haughey, Richard M. The Case for Multifamily Housing, Second Edition. Washington, D.C.: ULI -the Urban Land Institute, 2003. ULI Catalog Number: 162 and C64 International Standard Book Number: 0- 87420 -896 -3 Copyright 2003 by ULI -the Urban Land Institute 1025 Thomas Jefferson Street, N.W. Suite 500 West Washington, D.C. 20007 -5201 Printed in the United States of America. All rights reserved. No part of this book may be reproduced in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage and retrieval system, without written permission of the publisher. ULI Project Staff Rachelle L. Levitt Senior Vice President, Policy and Practice Publisher Gayle Berens Vice President, Real Estate Development Practice Jo Allen Gause Senior Director, Residential Development Richard M. Haughey Director, Multifamily Development Project Director Nancy H. Stewart Director, Book Program Editor James A. Mulligan Associate Editor Betsy VanBuskirk Art Director Cover and Layout Design Diann Stanley- Austin Director, Publishing Operations Cover photograph: Governor's Green, Bowie, Maryland, • courtesy of Archstone- Smith. Steering Committee Douglas Bibby President National Multi Housing Council Washington, D.C. Matthew Birenbaum Regional Vice President AvalonBay Communities, Inc. Alexandria, Virginia Thomas Bozzuto Chairman Bozzuto & Associates Greenbelt, Maryland John McIlwain Senior Resident Fellow and ULI /J. Ronald Terwilliger Chair for Housing ULI —the Urban Land Institute Washington, D.C. Clarine Nardi Riddle Senior Vice President National Multi Housing Council/National Apartment Association Washington, D.C. Daryl A. South Vice President Charles E. Smith Residential Arlington!, Virginia t has been said that there are two things Americans hate about growth: sprawl and high density. Unfortunately, most Americans do not fully compre- hend the irony in this statement or the inverse relationship between the two concepts. Low- density housing development is the main component and driver of sprawl. In many communities, however, local opposition and regulatory barriers have made it difficult to build the higher- density multifamily housing that many people need and want. Community frustrations about the problems associated with low- density sprawl, including traffic congestion, crowded schools, and air pollution, are often taken out —in a misguided way —on higher- density housing proposals. Some people also fear that multifamily housing will have negative effects on the property values of single - family homes and are concerned about new residents moving to the community. Much of the opposition is based on a Lack of understanding about the demand for such housing, a lack of experience with the multifamily products produced by today's building community, and a Lack of understanding of the relationship between sprawl and density. This publication addresses some of the common concerns about multifamily housing and discusses some of the advantages this type of housing can offer. Its purpose is to provide factual information to citizen groups, public officials, members of the development community, and others. Multifamily housing is defined here as housing that is built for rent or for sale at market prices and densities ranging from ten to 100 or more units per acre. The types of dwelling units included range from garden apartments and condomini- ums with surface or integral garage parking built at ten to 30 units per acre to mid -rise apartment and condominium structures of three to six stories built at 30 to more than 100 units per acre to high -rise apartment and condominium structures of more than six stories built at more than 100 units per acre. Multifamily living often is the best or preferred housing solution for many peo- ple at different stages in their lives for a variety of reasons. It provides an important housing option for young people just starting out in a career or sav- ing to buy a home, as well as for senior citizens who no longer care to maintain a single- family home yet want to remain near their children and grandchildren. Indeed, many people, in general, will find that at some point in their lives multifamily housing serves their needs. Ensuring that this important housing option remains available to those who need it is the purpose of this publication. Richard M. Haughey Director of Multifamily Development 1 Multifamily housing is a key component of smart growth. 2 ■ Well - planned, higher- density housing in areas desig- nated for growth has always been an integral component of smart growth. ■ By housing more people on less land, multifamily housing developments make it possible to preserve more open space and natural features than do single- family housing developments. ■ Multifamily housing reduces development pressure on the remaining undeveloped land in a region. ■ Multifamily housing usually requires less public infra- structure, including roads, sewer and water pipes, and electricity and gas lines. ■ Multifamily housing makes it financially feasible to integrate commercial and retail uses into a neighborhood. ■ Multifamily housing has a smaller per- housing -unit fiscal impact on local governments than single- family homes because it has a smaller impact on local schools. In many cases, apartment and condominium residents effectively subsidize the education of children from single - family homes. Multifamily housing is needed and is preferred by many people today. ■ Married couples with children have been declining in number since 1970 and now account for just one - quarter of the American population. ■ Nontraditional households have been growing in num- ber every decade and, taken as a whole, make up the new majority. ■ For the past five years, households making $50,000 per year or more have been the fastest - growing segment of the apartment market. ■ The population at the traditional age for renting (age 20 to 29) —the echo boomers —is expected to increase 11 percent between 2000 and 2010. ■ Some baby boomers will choose to downsize to an apartment or condominium after their children leave the "nest"; others will purchase or lease multifamily homes as second homes. ■ Multifamily housing allows seniors to remain in their neighborhoods through the different stages of their lives without the hassle of maintaining single - family housing ■ Over 13 million immigrants came to the United States in the 1990s; most new immigrants lack the capital required for sustaining the demands of homeownership and will remain renters for ten to 15 years before they can afford to become homeowners. Multifamily development often is more environmentally friendly than low- density development. ■ Multifamily development tends to be more compact than single - family housing development, thereby creat- ing less land disturbance and fewer impervious surfaces. ■ Multifamily residents tend to drive fewer miles per unit and also tend to use public transportation more fre- quently than residents of single - family housing. ■ Smaller multifamily units use less electricity and apartment residents in general use less water per unit than single - family homes. ■ Multifamily housing creates efficiencies that make it easier and more affordable to pick up trash and recyclables, and to pick up and deliver mail. Multifamily housing choices are important to the economic vitality of the larger community. ■ Access to a large and diverse labor pool has become the most important factor in making corporate decisions on business locations. ■ The number one problem facing the labor pool today is housing affordability. ■ Failing to provide a balanced range of attractive housing options makes a region less appealing to businesses while also driving up land and housing prices, thus promoting de facto segregation based on household income and type. ■ Where alternatives to expensive single- family homes are not available, many households are forced to move farther away from employment centers to find affordable housing, creating traffic and pollution problems as well as a lower quality of life and a decline in worker morale. ■ If the affordable housing situation is bad enough, businesses may be forced to relocate to areas with less expensive housing markets. Multifamily housing can help minimize areawide traffic congestion. ■ While it may increase traffic at an individual site, multifamily housing can significantly relieve overall regional traffic congestion. IN When affordable housing choices near job centers are in short supply, workers must live in distant locations where housing is more affordable, resulting in long, frus- trating, and expensive commutes and contributing to areawide traffic congestion. ■ Multifamily housing allows more people to live in housing they can afford that is near their work. ■ Multifamily housing developments that are clustered along transportation corridors make various kinds of mass transportation feasible. ■ Multifamily residents average one motor vehicle per household, while owner - occupied households average two vehicles. ■ Single- family housing is likely to generate an average of ten auto trips per weekday while apartments generate only seven; high -rise apartments generate even fewer trips, averaging only four trips per day. ■ The availability of recreational facilities — including fitness centers, pools, and picnic areas — within the multifamily community reduces the need for auto trips as most residents can walk to these amenities. Multifamily housing enables communities to provide housing that is affordable to a wider range of incomes. ■ In parts of the country where economic growth typi- cally is strongest, the labor force critical to sustaining the economy cannot find reasonably priced housing or cannot locate within an appropriate commuting distance of jobs. ■ Households depending on a single salary such as that of a teacher or a police officer cannot afford to buy a median -priced home in two - thirds of the metropolitan areas in America. ■ Working families with a critical housing need, defined as having to spend more than half their income on hous- ing or living in substandard housing, increased by 60 percent to 4.8 million households. ■ Under financial pressures, households typically are forced to move farther out from their jobs, enduring long commutes that aggravate existing traffic problems, or to double up and endure crowded housing conditions. ■ Apartments and condominiums play an important role in housing the workforce. They have been providing "workforce housing' for decades, long before the term was coined. Well- designed multifamily housing can be an attractive and compatible addition to the community. ■ Multifamily housing has come a long way from the plain brick boxes of the past; the design of today's apartments and condominiums is much more creative and sensitive to neighborhood context. ■ Multifamily structures allow greater flexibility in sit- ing buildings, which makes it possible to preserve open space and distinctive natural features of the site such as hillsides, streams, or stands of trees. ■ Visual preference surveys have demonstrated that consumers, when shown well- designed visual images of high- density communities and low- density communities, often prefer the high- density communities. ■ Many multifamily housing communities were con- structed using principles consistent with the new urban- ist movement. Multifamily housing has an important role to play in new urbanist communities of the future. IN There is no discernible difference in price appreciation of single- family housing located near multifamily build- ings and that of homes not located close to multifamily housing. T he smart growth movement emerged in the 1990s in response to the unin- tentional consequences of growth. The movement holds as its goals the preservation of high - quality open space, the more efficient use of infrastructure, the redevelopment of infill sites, and the integration of housing development with commercial uses and public transportation to reduce auto dependency and to increasing the walkability of neighborhoods. One of the keys to achieving these goals is to increase housing density in appropriate areas. As the densest housing type, multifamily housing provides the best opportunity to concentrate housing density. During the early stages of the smart growth movement, its goals often were mis- interpreted as antigrowth. Many embraced the concept of open -space preserva- tion but not the increased housing density needed to make it work. Some com- munities that adopted this incomplete interpretation of smart growth are now = enduring severe housing shortages and afford- Ratio of Apartment Effective Tax Rate (ETR) to Single- Family Home ETR in Selected States ability problems that may negatively affect (1.0 Indicates Rates Are Same) their regional economies. Welt - planned, higher - density housing in areas designated for growth National New Minnesota South Florida Texas Average York Carolina has always been an integral component of smart Apartments/ Single - Family Effective Tax Rate 1.97 5.96 3.49 growth. Indeed, it provides the tool with which smart growth goals can be achieved. 2.87 1.8 1.67 Smart growth inherently requires a tradeoff between the populated core areas of a metro - Source: Minnesota Taxpayers Association, 1998 State Property Tax Comparison Study. politan area and the greener periphery. Growth must be funneled away from open space at the fringe and directed to the urban core, which often is underused and generally has the infrastructure in place to support it. By housing more people on less land, multifamily housing development allows more natural features of a site to be preserved in common areas and in protected open space than does a typical single- family housing development. In addition, multifamily housing helps to satisfy a portion of overall housing market demand, - - thereby reducing development pressure on the remaining Number of School -Age Children per 100 New Housing units undeveloped land in a region. Owner - Occupied Mid- to High - Single- Family Homes Apartments Rise Apartments 64 21 19 Source: NMHC tabulations of 1999 American Housing Survey (Washington, D.C.: U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 1999). Because of its compact development form, multifamily housing usually requires less public infrastructure, including roads, sewer and water pipes, and electricity and gas lines.l In addition, because retail and commercial uses require high concentrations of housing units within a short com- 4 muting distance, multifamily housing makes it financially feasible to incor- porate these uses into the neighbor- hood. This, in turn, creates efficien- cies: for example, it reduces the num- ber and distance of automobile trips required by residents, thereby reduc- ing traffic and air pollution and cre- ating more free time for residents. Public transportation also works more efficiently when density is concen- trated. Mass transit requires a large € p number of riders within a relatively N - compact area to be financially viable, while low- density subdivisions have _ -- - _ too few people spread over too large an area to be served effectively by mass transit. All of these efficiencies o result in less automobile dependency. ° In addition to requiring less public infrastructure, multi- Well- planned, higher- density housing in areas family housing has a smaller per- housing -unit fiscal impact on local governments than single - family homes. Many designated for growth has always been an apartment owners pay for services, such as trash removal integral component of smart growth. Indeed that often are provided as a government service to single- it provides the tool with which smart growth family communities. Also, multifamily communities have a goals can be achieved smaller impact on local schools, which are the single largest expenditure for local governments.' Apartments average only 21 school -age chil- dren per 100 new apartments, compared with 64 school -age children per 100 new single - family houses. New mid- to high -rise apartments average even fewer children: 19 school -age children per 100 apartments.' Although apartment resi- dents do not pay property taxes directly, apartment owners do. To be sure, these taxes are passed on to residents in their rents. Since apartments frequently are considered commercial uses, many are taxed at a higher rate than residentially assessed properties. Many apartments are taxed more per square foot than single - family dwellings. Condominium owners, of course, pay property taxes directly. In many cases, apartment and condominium residents effectively subsidize the education of children from single-family s. dwellin 9 Y 9 � � i hirty years ago, married couples with children represented the typical Amer- ican household. This household type overwhelmingly preferred —and indeed still does prefer —to live in single- family homes. However, the 2000 U.S. Census reveals that this household type as a group has been decreasing in number since 1970 and now accounts for just one - quarter of the American population. Mean- while, nontraditional households have been growing in number every decade and, taken as a whole, make up the new majority. Nontraditional households include childless couples, single parents, people who live alone — including sin- gles, divorcees, widows, and widowers —and nonfamily /nonrelated households. Today, there are more than twice as many adult men and women who have never been married as there were in 1950. Overall, there are roughly three times as many widowed and divorced men and women today as there were in 1950. In the 1990s, two - thirds of all new house- holds were headed by single adults or sin- gle parents with families. All of these household types are the households most likely to choose multifamily housing.? Higher- income households constitute the fastest - growing segment of the apartment market. Many of these households want luxury amenities and choose urban living for the convenient lifestyle it offers. 6 Multifamily living often is the best or preferred solution to the economic or lifestyle choices that everyone faces over time. Many people at some point in their lives —as children, as single parents, as empty nesters, etc. —will fit into one or more of the categories of smaller house- holds mentioned above. Census data con- firm that these smaller households are becoming the norm. The average household size in the United States has declined significantly —from 4.76 people in 1900 to 2.59 people in 2000. There are significant demographic trends that indicate a continuing and growing demand for multifamily housing. One of the most important is the dramatic trend of immigration. The 2000 census revealed that the 1990s experienced the greatest burst of immigration in American history. More than 13 million legal and illegal immigrants came to the United States in the 1990s, and 8 million of them joined the U.S. workforce. In fact, eight out of ten new male workers in the 1990s were immigrants who arrived in the United States during the decade. (That the September 11 tragedy might slow immigration has thus far proven unfounded.) Since the 2000 census, more than 2 million immigrants have come to the United States." If that pace continues, the immigration rate throughout the 2000s should exceed the rate of the 1990s. Most immigrants lack the capital required to sustain homeownership and will remain renters for more than ten years before they can afford to become homeowners. These new American citizens and the probable influx of more immigrants in the future should continue to provide significant demand for rental multifamily housing. Households by Type: Selected Years, 1970 -2000 (Percentage Distribution) Household Type 1970 1980 Married Couples with Children 40.3% 30.9% Married Couples w/o Children 30.3 29.9 Other Family Households 10.6 12.9 Men Living Alone 5.6 8.6 Women Living Alone 11.5 14.0 Other Nonfamily Households 1.7 3.6 1990 2000 26.3% 24.1% 29.8 28.7 14.8 16.0 9.7 10.7 14.9 14.8 4.6 5.7 A further trend is the growth of the market for those Source: U.S. Bureau of the Census, Current Population Survey, March who prefer to rent The 19906 saw significant grow- Supplements: 1970 -2000 (Washington, D.C.: author, various years). ing demand for upscale apartments with all of the amenities found in single - family homes and more. For the past five years, house- holds making $50,000 per year or more have constituted the fastest - growing segment of the apartment market. Many renters in this income bracket who could afford to purchase single- family housing chose instead to rent. In fact, in a recent Fannie Mae National Housing Survey, fully 41 percent of renters sur- veyed said they rent as a matter of choice and not because of circumstances. This figure is up significantly from the 32 percent in the 2000 survey and the 28 percent in the 1999 survey who said renting was a matter of choice. Many in this category also are part of the "back to the city move- Multifamily living often is the best or preferred solution to the economic or lifestyle choices that everyone faces over time. ment of renters who have returned to the city to enjoy the amenities of urban living. Many urban and suburban renters by choice want the carefree convenient lifestyle of apartment living, including proximity to work, entertainment, culture, and transportation. Others cite a desire to be free from the expense of maintaining a house. The 1997 tax law changes provide yet another compelling reason cited by renters. The first $500,000 of capital gains on homes sold by joint filers ($250,000 for single filers) is now exempt from taxes. Freed from the prospect of incurring a huge tax liability, many are opting to leave behind ownership chores like cutting the grass and shoveling the snow in favor of renting. People between the ages of 20 and 29 traditionally have been the group most Likely to rent an apartment. A major trend influencing future demand for multi- family housing is the fact that after more than two decades of declining num- bers, this demographic group, known as the echo boomers, is expected to increase 11 percent between 2000 and 2010. This group is almost as large as the largest demographic group in the country: the baby boomers, parents of the 7 Why People Rent Apartments Reason Percentage Of Total Circumstance 51% Choice 41 Neither 7 Not Sure Source: Fannie Mae, Fannie Mae Nation- al Housing Survey 2001 (Washington, D.C.: author, 2001). echo boomers. Baby boomers will likely live in single - family dwellings; however, as they move into their 50s and 60s and their children leave home, some will choose to downsize to an apartment or condominium for a more carefree life- style. Others may decide to purchase or rent a multifamily home as a second vacation or semiretirement home. During the 1990s, the number of second homes increased faster than the rate of increase in the overall housing supply. Because baby boomers represent the largest demographic group in the country, even a small percentage choosing to move to multifamily homes represents a significant number of households. Many seniors choose multifamily housing for the same reasons that aging baby boomers choose it. Eighty -six percent of older Americans surveyed prefer to remain in the familiar neighborhoods where they have been living and age in place (65 percent of them have lived in the same community for more than 20 years). Many find, however, that they no longer need or can maintain the fam- ily home. Multifamily housing allows seniors to remain in their neighborhoods through the different stages of their lives without the hassle of maintaining single - family housing. 8 uLtifamily housing development generally is less environmentally disrup- tive than a comparable number of units of scattered low- density devel- opment. Because multifamily development, by design, houses more people per square acre than single - family housing development, it creates less land distur- bance and fewer impervious surfaces. It tends to require less impervious roadway and to preserve more contiguous and useful open space than single - family devel- opments. Housing more people on less land, multifamily development requires less costly infrastructure (water and sewer lines, roadways, electric and gas lines) to support. From a regional perspective, multi- family housing developments combat sprawl by pro- viding a denser housing mix. And they satisfy regional market demand for housing, thereby reducing overall development pressure on remaining open lands. Besides the loss of open space and the fragmentation of wildlife habitats, one of the greatest environmental threats posed by new development is urban runoff. Pollutants and sediment runoff are increased by the loss of forest cover and the introduction of impervi- ous surfaces, such as roofs and roads. Low- density, single- family development tends to create more impervious surface area than compact high- density development. In fact, a study for the state of New Jersey reports that compact development can achieve a 30 percent reduction in runoff compared with con- ventional suburban development. To illustrate just how multifamily developments can be greener, consider the following example of two neighborhoods, one single- family and one multifamily. Each provides 40 dwelling units. Assume that multi- family zoning permits 20 units per acre and single - family zoning permits four units per acre (typical per- mitted densities in many areas). To construct the 40 units of multifamily housing, two acres of land are needed; however, to construct a comparable number of single- family homes, ten acres of land are needed. A portion of both properties must be cleared and graded for development, but much more land must be cleared for the single - family homes to account for the 0 Compact multifamily housing development provides opportunities to preserve high - quality usable open space. larger housing units, the horizontal nature of the homes, the additional roads and driveways, and the yards. A typical single - family home is one to two stories high and contains more than 2,000 square feet, resulting in a big footprint of disturbed land. In addition, a frontyard and a backyard, prerequisites for most single- family homes, will be graded. Multifamily housing can range from two to 50 or more stories in height and individual units tend to be significantly smaller than 2,000 square feet, requiring a much smaller footprint and causing less land disturbance. In addition, no individual yards are required and fewer roads are needed, creating significantly fewer impervious surfaces. There are tangential environmental benefits to multifamily housing as well. Because multifamily housing tends to be located close to retail, jobs, entertain- ment, culture, and service uses, residents tend to drive fewer miles per unit and to use public transportation more. All of these factors in turn keep down the Multifamily housing development generally is amount of traffic and air pollution created by multifamily residents. Because the average size of a condominium or less environmentally disruptive than a apartment is significantly smaller than the average single - comparable number of units of scattered family home, most units use less electricity than single - low- density development. family houses. Studies also have shown that apartment resi- dents use less water per unit than single - family -home resi- dents. Efficiencies are created for trash pickup, recycling, and mail service as well. Certainly, many multifamily developments have landscaping that requires regular watering and maintenance, but they consume significantly less water than a comparable single- family subdivision with its variety of water uses. EE ities, counties, and states are in increasingly heated competition to attract companies to their areas. Good paying jobs, increased property and income taxes, and an improved quality of life for local residents are the expected pay - backs local governments hope to re- — ceive when a major employer decides to locate in their area. In the past, economic development officials would offer tax exemptions or abatements as incentives to convince companies to choose their location. Today, although taxes and the general business climate are still important, access to a large and diverse labor pool has become the most important factor in making corpo- rate decisions on location. And the number one problem facing the labor pool today is housing affordability. Accessible jobs and affordable housing are, therefore, inextricably related. A recent survey by the New York State Controller found that 86 percent of New York businesses surveyed cited housing costs as a serious deterrent to attracting firms to New York. Addition- al surveys in the suburbs of Chicago and Detroit have found similar results. Multifamily housing typically, although not always, is more affordable than single - family housing and therefore represents a major economic development tool for cities, counties, and states. Most companies employ workers with a wide range of skills and pay them a wide range of salaries. Companies seek business locations that can provide attractive housing opportunities for all of their employees, from administrative staff to executive management. Many communities, however, have failed to provide affordable hous- ing options to low- and middle- income workers. Often, this is the unfortunate result of elected officials' succumbing to community opposition to high- density housing, especially to multifamily rental apartments. Most important factors in Corporate Location Decisions Labor Availability and Productivity 60% Favorable Operating Costs 58% Customer /Client Opportunities 38% Transportation Access 35% Physical Viability of Site 33% Infrastructure Capacity 31% Source: PricewaterhouseCoopers, Trendsetter Barome- ter(New York: author, September 30, 2002). i A balanced range of housing options makes a region more attractive to businesses. Multifamily housing typically, although not always, is more affordable than single - family housing and therefore represents a major economic development tool for cities, counties, and states. in de facto segregai When communities fail to provide a balanced range of attractive housing options to households in all income groups, the region becomes less appealing to businesses. A lack of adequate housing for low- and middle- income workers drives up land and housing prices, further exacer- bating housing affordability issues for workers with higher incomes. Such shortsighted and self- centered policies result ion based on household income and type. Local officials who fail to plan for or permit multifamily housing and who enact restrictive local development regulations force multifamily housing to be con- structed even farther from the urban and suburban cores, worsening regional sprawl and traffic congestion. A recent report from the Harvard Institute of Eco- nomic Research posits that homes are expensive in high -cost areas primarily because of government regulation, that is, zoning. Though such planning and regulations often are deliberate, the combined unintentional consequences can be detrimental to the overall community's economic vitality in the long term. Problems Facing Wodong Families Where alternatives to expensive single - Percentage Reporting family homes are not available, many Problem as - Very Big- households are forced to move farther or - Fairly Big" away from employment centers to find Lack of Affordable Homes for Low - /Moderate- Income Households 41% affordable housing, creating traffic and Affordable Health Care for pollution problems. The quality of life and Low - /Moderate- Income Households gg worker morale suffer. While the effect of Job Layoffs /High Unemployment gq the problem used to be limited to low - Crime 20 wage workers, today many middle- income Pollution 21 workers, such as teachers, firefighters, and Source: Fannie Mae Foundation, Results of the Fannie Mae Foundation Afford- nurses, cannot afford housing near their able Housing Survey (Washington, D.C.: author, 2002). work. If the lack of affordable housing near employment centers becomes severe, a Labor shortage will result that then will require employers to pay higher wages to attract scarce workerS. Higher wage scales ultimately will drive up the costs of many goods and services. Businesses eventually may be forced to relocate to areas with less expensive housing markets. Such relocation decisions often have a negative impact on the regional economy. 12 T here is a prevailing belief that multifamily housing contributes to a com- munity's traffic problems. In fact, while it may increase traffic at an indi- vidual site, multifamily housing can significantly relieve overall regional traffic congestion. If workers are forced to commute long distances because of a lack of affordable housing near their jobs, they contribute to increased areawide traffic congestion. As more cars crisscross the community from distant homes to work, everyone's commute becomes more difficult, more fuel is consumed, air pollution problems are exacerbated, a feeling of crowding and frustration is created, and the overall quality of life for a region declines. Multifamily housing allows more people to live in housing they can afford that is near their work. In addition, when multifamily housing developments are clustered along transportation corri- dors, various kinds of mass transporta- tion become feasible. Low - density development cannot be economically served by mass transportation because great distances must be traveled to benefit comparatively few riders. Nodes of multifamily housing provide efficient locations for bus stops and possibly other mass transportation alternatives as well. In addition, many multifamily developments now offer high -speed Inter- net access and business centers that make telecommuting a more realistic alter- native than it has been in the past. Telecommuting introduces the option of eliminating or reducing the number of trips to and from work. Residents of multifamily housing tend to own fewer cars and to use them less often. Multifamily residents average one motor vehicle per household, while owner- occupied households average two vehicles. The Institute of Transporta- tion Engineers estimates that single- family housing is likely to generate an aver- age of ten auto trips per weekday compared with seven for an apartment. High - rise apartments generate even fewer, averaging only four trips per day. Higher - density housing developments located near transit corridors, on infill sites or in mixed -use centers, allow more people pedestrian or transit access to employ- Average Number of Vehicles by Housing Type Single - Family Homes Apartments 2 1 Source: NMHC tabulations of 1999 Amer- ican Housing Survey (Washington, D.C.: U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 1999). 13 Residents of multifamily housing tend to own ment, shopping, services, and leisure activities, thus reduc- fewer cars and to use them less frequently. ing dependence on the automobile. Multifamily residents average one motor With higher densities, the developer can find it economical - vehicle per household, while owner - occupied ly feasible to provide common facilities and recreational households average two vehicles. amenities. The range of amenities —which can include swimming pools, playgrounds, tennis courts, health facili- ties, and on -site convenience stores and services —is not typical of low - density, single - family neighborhoods, with the exception of master - planned communities. The availability of such facilities within the development reduces the need for auto trips as most residents can walk to these popular amenities. Weekday Vehicle Wip Generation by Housing Type Single- Family Homes Apartments High -Rise Apartments 10 7 a Source: Institute of Traffic Engineers, Trip Generation, 6th Edition, Volume 1 of 3 (Washington, D.C.: ITE, 1997), pp, 262, 299, 342. 14 Itifamily he T he 1990s saw the longest- running economic expansion in the nation's his- tory, with over 21 million new jobs created. Despite the economic pros- perity, or perhaps because of it, the problem of housing affordability wors ened. In parts of the country where economic growth was the strongest, the labor force critical to sustaining the economy either could not find housing that was reasonably priced or could not locate within an appropriate commuting dis- tance of their jobs. Although historically low interest rates and favorable federal policies have led to historically Households depending on a single salary high rates of homeowners hi p,33 the rapid appreciation of such as that of a teacher or a police officer home prices in many major metropolitan areas has shut cannot afford to buy a median - priced home many low- and middle- income workers out of the market. In California, for instance, only 28 percent of all households in two - thirds of the metropolitan areas in can afford to purchase a median - priced home.34 America. The Center for Housing Policy confirms that working families are being squeezed. It reports that from 1997 to 2001, the number of working families with a critical housing need — defined as having to spend more than half their income on hous- ing or living in substandard housing— increased by 60 percent to 4.8 million households. Households depending on a single salary such as that of a teacher or a police officer cannot afford to buy a median -priced home in two- thirds of the metropolitan areas in America. Nurses, for example, are priced out of all but 7s Multiple of Salary Needed to Purchase Median - Priced Home in Least Affordable Metropolitan Areas Metropolitan Areas Multiple of Salary Required to Afford Median - Priced Home Janitor San Francisco, CA 7,0 San Jose, CA 6,9 Orange County, CA 5.5 Oakland, CA 4,2 San Diego, CA 4.1 Teacher San Francisco, CA 3.5 San Jose, CA 2 Orange County, CA 2.0 Oakland, CA 2,0 San Diego, CA 1.6 Washington, DC -MD -VA 1.6 Seattle - Bellevue- Everett, WA 1.6 Raleigh- Durham - Chapel Hill, NC 1.6 Police Officer San Jose, CA 2,4 San Francisco, CA 2.1 Seattle - Bellevue- Everett, WA 1.9 Raleigh- Durham - Chapel Hill, NC 1.6 Los Angeles-Long Beach, CA 1.5 Charlotte, NC -SC 1.5 Boston, MA -NH 1.5 Licensed Practical Nurse San Francisco, CA 7.5 San Jose, CA 7,0 Orange County, CA 2.3 Oakland, CA 2.2 San Diego, CA 2.1 Seattle - Bellevue- Everett, WA 2.0 Retail Salesperson San Francisco, CA 7.5 San Jose, CA 7,0 Oakland, CA 5.0 Orange County, CA 4,7 San Diego, CA 4,2 Los Angeles -Long Beach, CA 3.8 Source: Center for Housing Policy, Paycheck to Paycheck. Working Families and the Cost of Housing in America (Wash- ington, D.C.: author, 2001). the Lowest cost -to- income markets, while janitors and retail salespersons cannot afford to purchase a home across the board. These households are an integral part of the com- munity and provide essential government, retail, and busi- ness services that are associated with a high quality of life for everyone. Multifamily housing is usually, although not always, a more affordable housing option than single - family housing for providing housing opportunities to a wide range of incomes. Apartments and condominiums were providing "workforce housing' long before the term was coined. When affordable multifamily options are not available, households are forced either to move farther out, enduring long com- mutes that aggravate existing traffic problems, or to double up and endure crowded housing conditions. If the situation is bad enough, they move to a more affordable community, leaving behind a Labor shortage and all of the problems associated with it. 16 T he architecture, design, and layout of multifamily housing have come a Long way from the plain brick boxes of the past. Today, designers of multi- family housing are much more creative and sensitive to neighborhood context. New building materials and construction techniques have enabled more innova- tive use of gables, chimneys, sloped roofs, and balconies in low -rise buildings. Developers are paying more attention to siting, exterior details, and landscaping in order to design housing that is appropriate to its natural setting and neigh- borhood traditions. Multifamily structures allow greater flexibility in siting build- ings, which makes it possible to preserve open space and distinctive natural fea- tures of the site such as hillsides, streams, or stands of trees. Increased attention to architectural detail and plan- ning has facilitated the development of more attrac- tive, more compatible multifamily communities. Often, neighboring residents fear that multifamily developments will have a negative impact on sur- rounding single- family home values. The value of individual property is determined by a number of considerations such as its location, the quality of the structure, the nature of the local housing market, and the quality of the neighborhood. There is no evidence that multifamily communities devalue nearby single - family homes. Apartment and condominium construc- tion often is the sign of a thriving local economy that supports a variety of jabs and housing types. Thriving economies also tend to be associated with appreciating home values. The American Housing Sur- vey, conducted every two years by the U.S. Bureau of the Census and the U.S. Department of Housing and Urban Development, reports that there is no dis- cernible difference in price appreciation of single - family housing located near multifamily buildings compared with homes not close to multifamily. Between 1997 and 1999, the average annual appreci- ation rate for single - family homes within 300 feet of multifamily buildings was 2.9 percent compared with 2.7 percent for single- family homes with no multi- family building within 300 feet. Today's apartments and condominiums have come a long way from the plain brick boxes of the past. 17 Average Annual Appreciation Rates for Single- Pamliv Detached Homes bV Nearness to Multifamily Buildings 1987 -1997 1997 -1999 Not Near MF 3.59 2.66 Near Any MF 3.96 2.90 Near Low -Rise MF 3.92 2.91 Near Mid- or High -Rise MF 4.02 2.79 Source: NAHB computations based on data in the American Housing Survey: 1985, 1987, 1995, 1997, and 1999. (Washing- ton, D.C.: U.S. Bureau of the Census and U.S. Department of .Housing and Urban Development, various years). Visual preference surveys have revealed that, when shown images of high- density communities and low- densit communities, consumers prefer the high - density communities. Visual preference surveys have revealed that, when shown images of well- designed high- density communities and low - density communities, consumers prefer the high- density communities. This contradicts opinion surveys that under- state consumers' preference for density. The disparity between consumers' stated view of density and their stated view of the images of density might demonstrate that pre- conceived notions of higher- density housing may not be based in reality. Studies at the University of North Carolina have shown that when consumers are given visual prefer- ence surveys with pictures, they demonstrate a preference for smaller lots, smaller homes, mixed - housing types, open space, narrower streets with sidewalks, and commercial development within walking distance. This preference is evidenced by the enduring popularity of many historic and densely populated neighborhoods in the nation's older cities, including Georgetown in Washington, D.C., the Back Bay in Boston, Society Hill in Philadelphia, and North Beach in San Francisco. In the 1990s, a trend toward more compact development took hold. Fueled in part by the new urbanist movement and the negative impact of sprawl, specifi- cally the traffic congestion associated with it, the trend surfaced as an antidote to sprawl. Many of the concepts that were embraced, including higher housing densities for a mix of incomes and ages, a mix of commercial and retail uses incorporated with the housing, pedestrian orientation, and access to public transportation, have been an appealing part of multifamily communities for decades. Clearly, multifamily housing is ahead of the curve in this trend and will play an important role in communities of the future. 18 1 Sedway and Associates, BART Higher Density Residential Study (San Francisco: author, 1989), p.1. 2 U.S. Bureau of the Census, 1997 Census of Governments, Volume 4, Government Finances, Finances of Municipal and Township Governments (Washington, D.C.: U.S. Department of Commerce, Bureau of the Census, 1997). 3 U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 1999 Ameri- can Housing Survey (Washington, D.C.: U.S. Department of Commerce and U.S. Department of Housing and Urban Development, 2000). - 4 D'Vera Cohn, "Married with Children Still Fading," Washington Post, May 15, 2001. 5 George S. Masnick, "The New Demographics of Housing," Housing Policy Debate, Volume 13, Issue 2, 2002, p. 299. 6 National Multi Housing Council, PowerPoint presentation: Apartments —The New American Dream?, available at www.nmhc.org/ Content /ServeContent.cfm ?ContentItemID =1828. 7 Karen A. Danielsen and Robert E. Lang, ULI on the Future: Smart Growth: Economy, Community, Environment: The Case for Higher - Density Housing (Washington, D.C.: ULI -the Urban Land Institute, 1998), p. 22. 8 U.S. Bureau of the Census, DP -1 Profile of general demographic characteristics: 2000, Data Set: Census 2000 Summary File 1 (SF -1) 100 percent data (Washington, D.C.: U.S. Department of Com- merce, Bureau of the Census, 2000). 9 Mark Obrinsky and Michael Tucker, "Coming to America," Multifamily Trends, Fall 2002, Volume 5, Number 4, p. 31. 10 D'Vera Cohn, "Immigrants Account for Half of New Workers," Washington Post December 2, 2002. 11 U.S. Bureau of the Census, Births, Deaths, and Migration for 2001 and 2002 by State (Washing- ton, D.C.: U.S. Department of Commerce, 2002). 12 Obrinsky and Tucker, "Coming to America," p. 31. 13 National Multi Housing Council and the National Apartment Association, Creating Successful Communities: A New Housing Paradigm (Washington, D.C.: National Multi Housing Council, 2001), p. 2, available at www.nmhc.org/ Content /SeweContent.cfm ?ContentItemID =2242. 14 Fannie Mae, Fannie Mae National Housing Survey 2001 (Washington, D.C.: Fannie Mae, 2001), p. 10. 15 NMHC PowerPoint: Apartments —The New American Dream?, July 2002. 16 Masnick, "The New Demographics of Housing," p. 296. 17 American Association of Retired Persons, Understanding Senior Housing for the 1990s (Washing- ton, D.C.: AARP, 1990), p. 28. 18 The Costs and Benefits of Alternative Growth Patterns. The Impact Assessment of the New Jersey State Plan (New Brunswick, New Jersey: Center for Urban Policy Research, Rutgers University, Sep- tember 2000). 19 National Association of Home Builders, "Every Community Needs Good Multifamily Housing," available at www. nahb .org /housing_issues /multi.htm, as of September 3, 2002. 20 PricewaterhouseCoopers, Trendsetter Barometer (New York: PricewaterhouseCoopers, September 30, 2002). 21 Fannie Mae Foundation, Results of the Fannie Mae Foundation Affordable Housing Survey (Washington, D.C.: Fannie Mae Foundation, 2002), p. 2. 19 20 Washington, u.L., region is described in some detail by George Grier in Jobs and Housing: The Dual Crisis (Washington, D.C.: The Greater Washington Research Center, 1990). 23 Michael Stegman, Roberto G. Quercia, and George McCarthy, Housing America's Working Families (Washington, D.C.: The Center for Housing Policy, 2000), p. 14. 24 Edward L. Glaeser and Joseph Gyourka, The Impact of Zoning on Housing Affordability ( Cam- bridge: Harvard University, March 2002), p. 5. 25 Anne Swardon, "Affordable Housing Void Threatens Labor Supply," Washington Post, July 19, 1990, p. E4. 26 David E. Dowell, The Suburban Squeeze (Berkeley: University of California Press, 1984), p. 8. 27 Ibid. 28 NMHC, A New Housing Paradigm. 29 Institute of Transportation Engineers, Trip Generation, 6th Edition, Volume 1 of 3 (Washington, D.C.: ITE, 1997), pp. 262, 299, 342. 30 Julie Hatch and Angela Clinton, Monthly Labor Review (Washington, D.C.: U.S. Bureau of Labor and Statistics, December 2000), p. 3. 31 Center for Housing Policy, Paycheck to Paycheck: Working Families and the Cost of Housing in America (Washington, D.C.: Center for Housing Policy, 2001), p. 1. 32 Ibid. 33 Joint Center for Housing Studies, The State of the Nation's Housing 2002 (Cambridge: Harvard University, 2002), p. 14. 34 PR Newswire, "Housing Affordability Declines Four Points in July; Gap Between California and U.S. Now 27 Percentage Points," PR Newswire, September 5, 2001. 35 Center for Housing Policy, America's Working Families and the Housing Landscape 1997 -2001 (Washington, D.C.: Center for Housing Policy, 2002). 36 Center for Housing Policy, Paycheck to Paycheck, p. 24. 37 Anthony Downs, The Need for a New Vision far the Development of Large U.S. Metropolitan Areas (New York: Salomon Brothers, Inc., 1989), p. 11. 38 For more detailed information on trends in the design of multifamily housing, see James W. Wentling and Lloyd W. Bookout, eds., Density by Design (Washington, D.C.: ULI —the Urban Land Institute, 2000). 39 National Association of Home Builders, "Market Outlook: Confronting the Myths about Apart- ments with Facts` (Washington, D.C.: NAHB, November 2001), p. 4. 40 NMHC, A New Housing Paradigm. • ���i .V"ZRU fug Multifamily, Housing Second Edition ULl -the Urban Land Institute