Minneapolis Mayor Jacob Frey’s push to increase housing access in the city is gaining momentum, with a record $40 million in the next year’s proposed budget allocated toward expanding affordable housing.

Frey, who said he thinks “all the time” about the lack of affordable homes in Minneapolis, has made the issue the cornerstone of his first few months in office.

In his first budget address on Aug. 15, he said: “We can’t put affordable housing investments off till tomorrow because tomorrow is too damn late.”

The U.S. Department of Housing and Urban Development (HUD) defines housing as affordable when the occupants are paying no more than 30 percent of their income on rent. In Minneapolis, city officials said rents are increasing at a faster rate than the incomes of lower-income households.

To offset this, the city is planning to spend a total of $53 million on housing — $40 million from city funding and $13 million from other sources including federal tax credits. The city’s $40 million includes a one-time investment of $28 million and $18.5 million of ongoing investments.

“The affordable housing crisis is something that people throughout our city and region are rallying behind,” Frey said. “This is a statewide issue, but it’s something that we need to be leading on, and will.”

In an interview, Frey said his affordable housing policy has four prongs: increasing access to housing by building new affordable housing units; preserving what the city calls “naturally occurring affordable housing,” or rental housing that gets no government subsidy and has traditionally been affordable based on its age and condition; increasing homeownership in the city, and protecting tenants from evictions by funding their access to legal help.

Ellen Sahli, president of the nonprofit Family Housing Fund, said housing affordability is an urgent issue in Minneapolis and that Frey’s budget proposal shows a “strong commitment to affordable housing.”

“The level of disconnect between the people who need affordable housing and the number of units that are there [and] the hot real estate market make it incredibly difficult for us to, as a community, meet the needs of the people who need this level of housing,” she said.

Limited housing stock

Andrea Brennan, director of housing policy and development for the city, said most low-income renters are left without options.

“The majority of low-income renters live in unsubsidized rental housing,” Brennan said. “There has been a lot of sales of that housing, and rents are increasing in that housing stock.”

In addition, she said rents are also increasing in the city’s naturally occurring affordable housing units. Frey’s budget proposal includes $3.3 million to preserve that housing.

Brennan said city officials are now working to offer property tax incentives to owners to keep rents affordable in those buildings.

The city needs to tackle the crisis before it’s too late, Frey said.

“Now we have capital flowing in. Now we have significant growth in development,” Frey said. “We have a role to play in ensuring that a significant portion of new units that go up are affordable.”

One option: zoning law

As the city continues to see rapid housing development, Council President Lisa Bender has been trying to pass an inclusionary zoning ordinance that would urge developers to set aside some percentage of the rental units at below-market rates.

The city has hired the Grounded Solutions Network, a national group that works to create affordable housing, to explore policy options for an inclusionary zoning policy that the council could consider soon.

On Wednesday, the group presented recommendations to the city’s Housing Policy and Development Committee. Among them were a requirement for developers to include affordable housing units in all new projects, rather than making it voluntary or based on incentives.

“Nationwide, we have seen voluntary programs tend to produce significantly fewer affordable housing units than programs which have requirements for some or all projects,” Stephanie Reyes, state and local policy manager for the Grounded Solutions Network, told the committee.

2040 Comprehensive Plan

The City Council could consider the inclusionary zoning ordinance concurrent with the 2040 Comprehensive Plan, which also includes measures to address the city’s shortage of affordable housing.

Because Minneapolis makes it easy for developers to build new buildings, Bender said, some of the recommendations from Grounded Solutions Network include a citywide program requiring developers to include some affordable housing units with no subsidy or more units that are deeply affordable in exchange for incentives.

“It’s not going to solve the [affordable housing] crisis alone,” Bender said of the inclusionary zoning, “but I think it’s one tool we can use to get affordable units in parts of the city that are rapidly growing.”