In the Twin Cities Metropolitan Area, unsubsidized rental comprises at least 57% of rental units affordable to households at or below 50% of area median income. Unsubsidized affordable properties, which include 120,000 units in the metro, provide more affordable housing than all privately owned subsidized rental properties combined. Even though the unsubsidized rental market functions without governmental or non-profit involvement, there exists room for interventions that could better preserve or create affordability in this market, or help ensure that cheaper units are rented out to low-income people, rather than to those who can afford more expensive units.
“The Space Between” is a new report on a study conducted through the Minnesota Preservation Plus Initiative (MPPI) at the request of three strategic partners: the Family Housing Fund, the Greater Minnesota Housing Fund, and the Minnesota Housing Finance Agency. The research team included One Roof Global Consulting, the Housing Preservation Project, and Urban Land Institute of Minnesota. MPPI strategic partners wanted to better understand unsubsidized rental housing and how to preserve those resources.
The report recommends four different types of interventions. The first-order recommendations are advised even if no other actions are taken: strategic partners should communicate this report publicly, and data collection should be strengthened. Also, since the Metropolitan Council plays an important role in promoting the values of unsubsidized rental housing, first-order recommendations for this organization include:
- Doing more education and increasing transparency around how housing goals are set
- Counting affordable housing opportunities in a more nuanced way
- Create incentives for local governments to test identified interventions
- Supporting mission-driven organizations to preserve unsubsidized housing
Other types of recommendations include:
- Direct interventions: project/program level interventions that are designed to impact a subset of properties, and create incentives to property owners in exchange for an affordability pledge. Incentives could be created through local government subsidy, or low-cost loans for rehabilitation, or property tax incentives. For example, strategic partners and the Met Council could work together to encourage cities that have limited opportunities to invest in the development of new affordable units to use local funds to subsidize rents on existing units.
- System-wide interventions: interventions that benefit all property owners and property types, such as promoting existing landlord/owner educational efforts.
- Long-term recommendations: ideas that should be monitored as the market changes, including short-term debt refinance, and use of Variable Rate Demand Notes. For instance, since many properties that are taking advantage of the currently low interest rates will need to refinance in the next 3 or 5 years, this provides opportunities to exchange debt for affordability commitments.
Given the complexity and sensitivity of market, there are no universal recommendations. It is better to work locally and partner for targeted, nuanced interventions, says the report. For more details on the report, click on the link below:
The "Space Between" report is among the first of its kind on unsubsidized affordable rental housing market. We would love to hear your comments/opinions on this market and the recommendations laid out in the report. Please share your thoughts in the comment box.