This story sharing made possible by the donations of Bill and Michelle Pohlad, as well as long-time supporter Kristin Siegesmund.
Anne Mavity. Photo Sarah Whiting
Anne Mavity has decades of experience in housing policy, advocacy, and practical execution. There is no doubt in her mind what the housing problem is: “We need more housing, of every type, in every corner of the state. Period.”
Mavity, who serves as executive director of Minnesota Housing Partnership (MHP), noted that “we are short 100,000 homes for what we need to just keep up with population growth.” In Minneapolis specifically, the vacancy rate is technically 6.6 percent (5 percent would be considered a healthy rate), but when that data is disaggregated by housing types and prices, it’s not uncommon to see vacancy rates of 0 to 2 percent. “What people are experiencing — the misery in the housing market — is in fact supported by data,” she says. Mavity identified the greatest gap as affordability. “While we generally think that when there’s more housing, supply and demand will shape the economy, it is unlikely to bring rents down. What it might do is limit the escalation of rents in the future,” she shares, adding that “part of that is that the new housing being built is generally Class A: fancy stainless- steel, granite-countertop housing, which is not going to be affordable without generous, abundant public resources or rental assistance vouchers.”
On the flip side, the affordability factor of Class C properties, such as older homes that are naturally more cost- effective when they return to the market, are often bought up instead by developers who make improvements accompanied by rising rents. “Again,” says Mavity, “they put in some granite and stainless steel and now it’s no longer affordable and accessible to the folks who might have lived there for generations.”
Mavity notes the importance of acknowledging that “in all categories, it’s the lowest-income folks — seniors living on a fixed income, folks just entering adulthood, folks forming families, first-time homebuyers, people in rural communities — who have housing costs that are out of reach.”
Solution 1: Adjust Regulations
“We need to make it easy to build,” she says. She cites the 12-month streamlined rebuilding process after the 35W bridge collapse as evidence that it is possible for the state to waive its labyrinth of guidelines safely and to great effect. The housing market has become “so twisted in rules and regulations” that if we were going back in time to the housing that emerged organically to create today’s communities, much of that housing stock would never have been built because it would be considered illegal.
Mavity points out that half of other states are ahead of Minnesota in addressing the regulations issue.
Solution 2: Local Pushes, Public Funds
Years ago, as a city council member in Saint Louis Park, Mavity recalls encouraging developers for 10 years to build affordable housing, but zero units were built. After implementing inclusionary zoning — which requires a certain percentage of affordable housing in any development that needs something from city, which almost all do — cost-effective housing actually got built.
A challenge is that all of this comes with a cost, requiring the filling of gaps with public funding. The cost of building or operating housing, compared to the revenue available to cover those costs, generally does not add up. “We are also in the midst of a national crisis in property insurance,” Mavity adds. Insurance rate increases among multifamily housing providers can reach 250 percent. This requires robust resources. “Our estimate, if we were to actually fund what we need, would be about $2 billion a year.”
There is precedent, however, for smart and relatively painless sources of funding. For example, “The Legacy Amendment funded arts and parks on a 3/8 percent statewide sales tax. We’ve modeled Our Future Starts at Home after that,” says Mavity, speaking of a coalition of community leaders and housing advocates who are seeking to establish a steady, dedicated revenue stream for housing in Minnesota.
Mavity estimates that a 3/8 percent sales tax used for housing would produce about $500 million a year. “We are a little ahead in Minnesota because, in 2023, we created the statewide rental assistance program that was funded by a metro sales tax. But Greater Minnesota also needs affordable housing.”
Solution 3: Payment Assistance
She also advocates for rental and down payment assistance “to get people into homes and help them stay there because housing costs are a key factor in people being able to afford their lives.”
In a recent report, MHP found that more than 101,000 households, serving 178,000 people across Minnesota, currently use federal rental assistance. “This has helped bridge that gap between housing costs and what people can actually afford,” Mavity says. “Still, only 1 in 4 eligible families receive this assistance because of federal budget constraints. Minnesota families and our economy are stronger when everyone can afford their homes. We need to protect access to this assistance and expand it to more families.”
Another Consideration
Amidst an uncertain and occasionally hostile landscape, the good news is there is enormous room for creative solutions. Innovation will be increasingly important as significant decreases in federal funding impact the state, Mavity says. She highlights various ideas that are being implemented: the development of community land trusts, apartment conversions from office spaces, modular housing, and new funding for social housing that passed in a bill this year.
These efforts can increase racial equity in property ownership and address the loneliness crisis by enabling people to live in communal environments. Mavity poses this question: “How do we design policies that roll out new opportunities?” MWP
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