Don’t Rush to Judge These Three Artist’s Lofts in The Twin Cities

Posted by Raisa Johnson and Michael Bodaken on July 13, 2016

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.:

  1. Provide affordable housing for low and moderate income residents;
  2. Affirmatively further fair housing;
  3. Allow underserved populations access to "high opportunity areas;"
  4. Stimulate community revitalization in historically distressed communities; and
  5. 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)

About the author more »

Raisa Johnson is the current Energy Efficiency Policy intern for the National Housing Trust. She is pursuing her Masters degree in public policy at Georgetown's McCourt School of Public Policy. Michael Bodaken is President of the National Housing Trust and of the National Housing Community Development Fund, NHTCDF.

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COMMENTS

Marjorie A. Martin
14 Jul 16, 12:21 pm

This subject of this article is timely, as these discussions are happening on a daily basis in the arena of affordable housing, most intensely within housing finance agencies (HFAs) attempting to satisfy the somewhat conflicting requirements for the expenditure of LIHTC funds, while producing high-quality affordable housing. Add to this the burden of cost, which is increasingly falling under the scrutiny of politicians, stakeholders, and the boards charged with the authority to approve HFA LIHTC awards. HFA staff and external affordable housing advocates find themselves in a defensive posture, attempting to explain/ justify their selections for award and the high costs per unit of the projects selected. The fact that these projects need to be maintained as decent affordable housing for a minimum of 30 years, without the ability to raise rents sufficiently to address maintenance and any necessary renovation costs arising during that period, is a fact repeatedly asserted by advocates, but all too often ignored by those less familiar with, or perhaps less supportive of, the program.

Chip Halbah
19 Jul 16, 12:43 pm

As an affordable housing advocate living down the street from A Mill I do not see this property as central to my organization’s work although I do recognize its community development value.

There has been a ton of criticism of the project in local and national media based on the argument that the A Mill development represents a misuse of scarce housing resources and caters to a white population of artists. I think this criticism is way overblown. In addition to what Bodaken and Johnson have contributed I can add a few details.

First, anyone who has been inside the Minneapolis A Mill property realizes that this is a unique combination of a monument to the city’s history, an arts center, and residential housing. It is very misleading to use as the “per unit cost” the entire cost of development divided by the number of units. Most of the space and cost is not for housing.

Second, and more importantly, is that no scarce housing resources were used for this project. There were tens of millions in historic tax credit equity invested in the development plus millions in environmental clean up funds. The housing tax credits used were four percent credits; and the tax exempt bonding associated with these credits would otherwise have gone unused in the early post-recession period when the project was developed.

Third while the population of A Mill is predominately (about 85%) white in a city that is 40% households of color, one should look more closely at the cost structure and unit composition before drawing conclusions. As mentioned above, this is a tax credit development without benefiting from additional housing resources to expand affordability, so rents are priced to be affordable at 60 percent of area median income. Furthermore the majority of the units are one-bedroom apartments. A colleague at the University of Minnesota found that 86.5% of the Minneapolis single-person households with incomes at 60% AMI are white. So it is not surprising that this property would have the racial composition that it does, though I encourage the developer to affirmatively market the property to do better than the city average.

Low income people, mostly at 30% AMI or below, in Minneapolis desperately need more affordable housing. Disproportionately this population in need of housing assistance consists of households of color. The A Mill was not intended to be and is not a response to this urgent need. But the media exposure for this and similar projects does provide an opening for explaining how federal resources operate and that “affordable housing” does not mean one thing. Thanks to Bodaken and Johnson for moving the conversation in the direction that they did.

Disclosure: a principal of Dominium, the developer of A Mill, serves on the board of Minnesota Housing Partnership.

Jerry Rioux
20 Jul 16, 8:02 pm

I’m really disappointed that the New York Times and others seem to think that poor whites don’t deserve affordable housing or public housing subsidies. 

It seems to me that poor whites don’t get a fair share of the pie when it comes to affordable housing and public housing subsidies.  For example, the National Low Income Housing Coalition reported that while 47% of ELI renter households are non-Hispanic whites, only 32% of public housing tenants and 35% of voucher holders are white.  Whites do better with project-based vouchers and I don’t know how they fare with LIHTC units.

Perhaps if more poor whites felt that they got a fair share of public benefits, fewer of them would support Trump?

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