Deeply Affordable Housing in the Twin Cities Metro: Who produces it, where, and how?

Abstract

Despite a vibrant affordable housing industry in the seven-county Twin Cities metropolitan area, little research has focused specifically on the challenges in developing deeply affordable housing. This capstone project shines light on the local landscape of deeply affordable housing, through data analysis, mapping, and stakeholder engagement. Over the past decade, deeply affordable housing development in the Twin Cities metro has been concentrated in Minneapolis and Saint Paul, and supply trails far behind demand. Amid a decades-long disinvestment in public housing at the federal level, non-profit developers are overwhelmingly responsible for providing deeply affordable housing. These developers operate on razor-thin margins and rely heavily upon subsidies from all levels of government, including tax credits, project based vouchers, tax increment financing, and various loans and grants. Currently available subsidy is highly competitive and falls short of adequately supporting both new developments with deeply affordable units and preserving already existing deeply affordable units. Further, as construction and operating costs rise and interest rates remain elevated, the subsidy available is stretched thinner still. With little hope for significant investment at the federal level, public entities at all levels of government in the state can enact policy interventions to increase development, which could include state sponsored vouchers, a robust state housing tax credit, inclusionary zoning, and more. To address concerns over the need for sustained investment in housing, a statewide constitutional amendment has been proposed at the legislature. This could provide needed and ongoing funding to meet the metro-wide demand for deeply affordable housing.