There has been some debate recently around three Minnesota affordable housing projects. The Carleton Place Lofts, Schmidt Artist Lofts, and the Pillsbury A Mill have all come under fire in a recent New York Times editorial piece for receiving federal money for development through the artist-exemption in the Low Income Housing Tax Credit (LIHTC) program.
The A Mill, in particular, is called out for its costs and 80 percent white residential occupancy. The various city governments have been accused of ignoring the needs of low income families of color in favor of young, white, and often childless artists as a political concession to the Twin Cities’ wealthy elites, who have historically opposed the development of affordable housing in their communities. According to the editorial, artist housing represents political kowtowing at best and the advent of two racially separate and unequal affordable housing systems at its worst.
Let’s be clear: any affordable housing development funded by the federal government must be committed to inclusionary policy for all protected classes. The federal Fair Housing Act and HUD’s Affirmatively Furthering Fair Housing Rule say as much. Still, it is important to recognize the progress that housing agencies across the nation have made with innovative programs like LIHTC to build affordable housing in areas of opportunity. If we step away from this small subset of affordable housing, we can see not only a more nuanced view of affordable housing strategies, but also the flexibility and innovation that Housing Credits support. Looking at just three properties offers a myopic view of the populations that Minnesota housing organizations serve. For a complete understanding, one has to consider the entire Minnesota portfolio of Housing Credit properties to appreciate how the state and city governments meet the various, and sometimes conflicting, public policy goals mandated for LIHTC by Congress and HUD, e.g.:
- Provide affordable housing for low and moderate income residents;
- Affirmatively further fair housing;
- Allow underserved populations access to “high opportunity areas;”
- Stimulate community revitalization in historically distressed communities; and
- Provide affordable housing for artists.
The Pillsbury A Mill achieves the first, fourth, and fifth goals. Other Housing Credit properties in Minnesota undoubtedly achieve the second and third. A range of housing options are required to meet the diverse needs of low and moderate income households. With a sensitive residential application and screening process, A Mill and similar future developments can achieve racial diversity and provide the access to areas of high opportunity from which people of color have historically been excluded.
What about the cost? While this particular set of multi-family units is more expensive than other housing, these artist units are some of the only developments in the area that are affordable to families with moderate incomes. Building in affluent areas costs more and produces fewer housing units than building in distressed areas; however, the existence of affordable housing where none was sited previously translates to opportunity. To take aim at developments in urban settings because they are more expensive than other developments is misguided. Indeed, The New York Times op-ed piece concedes that A-Mill contributes to the revitalization of the surrounding area. Economic revitalization is a top priority for metropolitan regions throughout the nation, and is especially critical for minority communities which have traditionally been locked out of private investment. The development of multifamily housing that is available to low and moderate income residents of all races in areas with strong economic growth, good schools, and low crime is a win for the Twin Cities.
Let the merits of the artist-exemption be debated; we certainly understand why some are skeptical. Nevertheless, let’s be mindful that LIHTC allows affordable housing organizations to achieve significant results in a landscape where scarce and dwindling resources exist to develop affordable housing. Today, due to congressional spending caps, the federal government provides rental assistance to only 25 percent of the low income families who are eligible. As wages stagnate, rents rise, and urban communities become more desirable than ever, Housing Credits allow developers to harness public-private partnerships to provide housing than otherwise would not exist.
Finally, we advise The New York Times editorial board to take into consideration that each state and local government which allocates Housing Credits does so according to a detailed Qualified Allocation Plan (QAP) that must meet federal regulations, is revised annually, and is subject to a thorough public review and comment period. Those who object to the City of Minneapolis’ use of Housing Credits have every opportunity to comment to that effect to deter future investments.
The development costs of the Pillsbury Flour Mill could have undoubtedly been better contained, but ultimately, the LIHTC should not be condemned for the perceived problems of three projects. They pale in comparison to the more than 48,000 affordable homes serving 111,000 low income Minnesotans that have been developed or preserved via the Low Income Housing Tax Credit.
(Photo credit: J E Theriot, via flickr, CC BY 2.0)