MEMBER UPDATE APRIL 14, 2023 |
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Hello and happy Friday! Below are some lengthy but important updates! Please take a look and feel free to reach out with questions. |
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Robb Bader, Bader Development Twin Cities Housing Alliance Board President Cathy Capone Bennett Twin Cities Housing Alliance Executive Director |
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Minneapolis Releases Report on the Impact of Rent Stabilization Frameworks with Key Recommendations |
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The City of Minneapolis staff have released a detailed report that outlines potential impacts of rent stabilization frameworks that would cap rent at 3% or cap rent at 7% plus CPI. Both of these scenarios include exemptions and were the basis of the two frameworks that came out of the Minneapolis Rent Stabilization Work Group completed late in 2022. The report will be presented to the City’s Business, Inspections, Housing and Zoning Committee (BIHZ) meeting on April 18th at 1:30 pm. This meeting is open to the public but will not include a public hearing at this stage. The meeting will also be livestreamed on the City’s YouTube page. We encourage TCHA members to attend in person if at all possible. It is anticipated that if a legislative process moves forward there will be key opportunities for public testimony and TCHA will provide talking points at that time for our membership. While TCHA is still reviewing the 67 page report in more detail, we wanted to share with you the staff’s key findings and recommendations. Many of the overall findings align with TCHA’s work in preparing the Rental Housing Affordability Gap Primer regarding the unintended consequences of rent control including the impact on production, loss of city revenue, reduction in property investments and property quality, removal of rental units from the market and the loss of opportunities for those households who are most cost burdened. You can find links to the city reports here. City Staff Report Findings: - A rent stabilization policy would not effectively address the problem of renter cost-burden. It does not target relief to renters whose incomes are insufficient to afford rent in the housing market. A rent stabilization policy would also impede growth of the city’s housing stock, which is counter to numerous existing City policies designed to promote the production of new housing to ensure existing and new residents have access to a range of options to meet their needs.
- If a rent stabilization policy was adopted in Minneapolis:
- Some existing renters could benefit from increased housing stability due to the certainty of the limit on future rent increases;
- Renters may in fact face greater housing instability due to higher rent increases than they otherwise would have experienced, as property owners could begin raising rents to the maximum amount allowed.
- Renters may experience diminished housing quality, as a rent stabilization policy could disincentivize property maintenance and improvements.
- There could be a significant decline in the creation and preservation of rental housing units in Minneapolis.
- The City of Minneapolis could experience a significant property tax levy shift due to diminished rental property valuation:
- Average annual cost of shift under Framework 5: $95 million
- Average annual cost of shift under Framework 7: $55 million
- The City of Minneapolis could experience a significant revenue decline due to diminished building permit activity and reduction in the housing stock:
- Cumulative (10 year) estimated loss under Framework 5: $108.3 million - $139.6 million.
- Cumulative (10 year) estimated loss under Framework 7: $39.3 million - $74.8 million.
- The City would spend approximately the following amounts per year enforcing and implementing the policy:
- $1,516,000 for Framework 5
- $1,032,000 for Framework 7
- The costs and detrimental impacts of a rent stabilization policy would outweigh any potential benefits in addressing renter cost-burden.
- Deeper investment in known effective strategies to boost incomes and support renters would more effectively address the problem of renter cost-burden, without impeding the creation and preservation of rental housing units that are needed for Minneapolis residents.
City Staff Recommendations Based on These Findings: - Staff does not recommend the adoption of a rent stabilization policy for the following reasons.
- A rent stabilization policy would not effectively address the problem of renter cost-burden.
- The anticipated costs to the city, including the anticipated decline in housing development, decline in revenue, and significant cost of enforcement, outweigh the anticipated benefits, which would impact a small percentage of renters.
- Now is a particularly risky time to adopt a policy that staff anticipate would impede the development of new rental housing units. The City and surrounding market are still recovering from the economic impacts of the COVID-19 pandemic, and there are existing reasons to be concerned about the pace of needed development. Also, a legal challenge to St. Paul’s rent stabilization policy is pending in court – the outcome of this case will provide needed guidance.
- The City should continue supporting, and explore deepening investment, in known effective strategies to relieve renter cost burden. The City Council has adopted and supported several policies and programs in recent years that have proven to be impactful in helping families afford their rent. Staff recommend increased support for:
- Strategies that identify and hold to account property owners engaging in egregious conduct that leads to housing instability;
- Strategies that support renters whose incomes are not enough to afford their homes, including Guaranteed Basic Income (GBI) and Stable Homes Stable Schools (SHSS); and
- Strategies that promote the creation of new rental housing units and incentivize affordability, including the NOAH Preservation Fund, the 4d Affordable Housing Incentive Program, the Inclusionary Zoning policy, the Affordable Housing Trust Fund, and related initiatives
TCHA will continue to monitor these issues and communicate with you through action alerts, talking points, and other resources. |
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TCHA Releases its Twin Cities Regional Rental Housing Affordability Gap Primer |
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TCHA is happy to release the Twin Cities Regional Rental Housing Affordability Primer (Primer) which outlines the key drivers, impacts and strategies to address the housing shortage in the Twin Cities region. The Primer was developed to help diverse housing stakeholders – including policymakers, residents, community advocates, and property owners, managers, and developers – engage in productive conversations and develop effective and durable solutions to local and regional housing problems and challenges.With rent control being a key policy issues we have spent time gathering data on the unintended consequences of restricting rents that impacts the market’s ability to build more and limits the ability to invest in current housing supply while all negatively impacting those most cost burdened. We have also spent time understanding what the real issues are - significantly under supplied and incomes not keeping up with housing costs The Twin Cities Regional Housing Affordability Gap Primer provides the following: - Outlines the regional drivers of affordability which includes the erosion of market affordability, inadequate production of new supply, lagging income growth and income inequality and impediment to safe and fair housing.
- Provides a framework for addressing the housing affordability gap including effective and efficient policy tools.
- Summarizes how rent control will not solve the problems but actually make the issues worse.
This is a resource for you as members of TCHA to utilize the data, suggested policy tools and impacts on rent control when talking with your networks, political leadership, neighbors, and friends. |
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Thank you for attending the TCHA Spring Event! |
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The Spring TCHA event was a great success and thank you to all who attended! Special thanks to Solhem for opening up the beautiful new Hencen Apartments for the event and Winthrop and Weinstine for hosting the reception. Look for future events later this summer and fall! |
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