Major public intervention in the city’s poorest area has created a new generation of housing stock that some worry is overly restricted to lower-income people.
At their small home in North Minneapolis, Annie Hansen-Burke with her partner, children Leo and Josephine moving out to a bigger home in Robinsdale. Because of their income, they are unable to purchase homes are that are income restricted. On the right is real estate consultant Angie Sherer.
Hundreds of houses and apartments are rising in north Minneapolis, thanks to ample government help in the wake of the foreclosure crisis and the May 2011 tornado. But not just anyone can live in them.
Major public intervention in the city’s poorest area has created a new generation of housing stock that some worry is overly restricted to lower-income people. Private developers still can’t generate enough revenue to build without subsidies in many neighborhoods, but the government programs that help them come with income restrictions.
City records show that just six of 501 new and proposed apartment units on the North Side are open to people of all incomes. About 76 percent of the total apartments will be limited to renters making 50 percent of the area median income, about $29,000 for a single person.
New and rehabbed homes built with public dollars are available to a wider range of buyers. Records show an array of recent programs are aiding at least 189 homes on the North Side that are now, or will be, restricted to buyers making 50 to 120 percent of area median income. About 115 are limited to households making 120 percent of the median, or $89,640 for a family of three.
Still, some have been turned away from new subsidized houses because they make too much.
“We’re building housing dedicated to problems. Not really to solutions,” said Kenya McKnight, a community activist. McKnight said while the North Side needs more quality affordable housing, more should be done to raise the incomes of people who already live there.
Sara Garry, a spokeswoman for nonprofit developer Project for Pride in Living, noted that even 50 percent limits are above median incomes in a distressed neighborhood like Hawthorne. Plus, home buyers aren’t constrained from earning more money in the future.
Many of the homes with a 120 percent income cap are the product of Green Homes North, an initiative launched by former Mayor R.T. Rybak to attract middle-class homeowners to north Minneapolis.
“Housing is a private market that only should have the public step in to provide new access to people who can’t afford something,” Rybak said. “Or, in the case of Green Homes, we need to give a stimulus to get the private market going better.”
Annie Hansen-Burke, a university lecturer, and Tracy Burke, a school counselor, looked for a new-construction home last year as their family outgrew their bungalow in the Webber-Camden area. They stumbled on a Green Homes North house at 42nd and Upton Avenue N. that seemed like a good fit.
“Our Realtor contacted the selling agent,” Hansen-Burke said. “And she said that there were income restrictions and we exceeded it barely.” The income limit was $94,700, said their mortgage consultant, Angie Sherer.
So they bought a new home just 10 minutes away in Robbinsdale. “I feel sort of sad about it,” Burke said of leaving Minneapolis after 10 years. They plan to rent their old home.
“In north Minneapolis, we shouldn’t have to refuse anybody who makes more money,” said real estate agent Deb Wagner, who has had to turn down several interested buyers for a city-subsidized house on 17th and Upton Avenues N. She now calls agents before a showing to remind them of the income restrictions.
“If you’ve got two professionals trying to buy a home, they can’t buy one of the beautifully rehabbed ones through the [federal Neighborhood Stabilization] Program, they can’t buy a Green Home, what are they going to buy?” asked City Council President Barb Johnson, who represents the northern half of the area. “It is just ridiculous. And it is further concentrating economic flattening in north Minneapolis.”
The city’s figures do not include privately financed housing developments. But Wes Butler, the city’s director of residential finance, did not know of any recent non-subsidized North Side apartment projects, and bargain-basement prices aren’t enticing private investors to buy city-owned vacant lots in distressed neighborhoods like Folwell, Jordan and Hawthorne.
Jim Dropps, a builder and real estate agent, said a new house can cost $130,000 to build. While prices have risen in recent years, homes in Near North sold for a median price of just $81,000 in 2013, according to the Minneapolis Area Association of Realtors.
“Maybe it would work, but not well enough where a developer’s going to want to come in there and spend the time to do it,” Dropps said.
Finding a new, non-income-restricted apartment can be hard. Jackie Cherryhomes, a lobbyist who formerly represented the North Side on the City Council, said she has found that many young working people of color are living in Golden Valley, rather than Minneapolis, because of a scarcity of amenity-rich apartments.
But importantly for North, the new restricted apartments are also providing better-managed housing and key services in an area where rundown duplexes owned by absentee landlords are often blamed for perpetuating crime. Sue Haigh, president of Twin Cities Habitat for Humanity and chair of the Metropolitan Council, said that is a larger problem than an oversaturation of income-restricted housing. “A very small number of affordable rental units … are built in a single year,” Haigh said.
Poverty remains endemic on the North Side. The Met Council found that north Minneapolis has 20 of the city’s 38 racially concentrated areas of poverty — defined as communities of color living predominantly below 185 percent of the federal poverty line. Minneapolis has more such areas than anywhere else in the metro area.
Former Council Member Don Samuels, who would like to see policies that encourage more balance, said a larger middle class in North will benefit everyone by bringing more demand for better school outcomes, retail, less crime and improved city services.
Met Council Member Gary Cunningham, who’s married to Mayor Betsy Hodges, believes major infrastructure investments, such as a streetcar on West Broadway, should be made to lure investors. He said the city, the county, the Met Council and the state housing agency should develop a coordinated strategy to strike a better income balance in North. He credited the city’s recently departed housing director for attempting to achieve that balance.
“The problem was that none of it was at the scale that’s necessary in order to change the current dynamics,” he said. “Unless we’re willing to make a significant investment to attract developers and middle-income individuals to live there, it’s going to maintain itself.”
There’s no agreement on how to do that.
“I don’t think there’s a public will to subsidize market-rate apartments,” said City Council Member Lisa Goodman, chair of the community development committee. Goodman believes there will be more opportunities to create an income balance as the market improves. A major test will come this summer, for example, when a number of vacant lots near a greenway at the northern edge of the city go up for sale.
“We’re hoping that the single family homes that are built on those lots will be for people with a little bit higher income,” Goodman said.
Eric Roper • 612-673-1732