Chip Halbach: Stimulus plan should include better housing

We could improve safety without harming affordability -- while also creating jobs.

By CHIP HALBACH

Last update: December 29, 2008 - 7:31 PM

Sixty families lost their homes just before Christmas because government gave older apartments a free pass on fire safety. That's a conclusion that could be drawn from the Dec. 24 Star Tribune story reporting on the fire that recently destroyed a Burnsville apartment complex.

The story quoted me as defending the status quo, stating that already hundreds of Minnesota renters are paying far more in rent than is sustainable and that requiring older apartments to be retrofitted with sprinklers would end up burdening people least able to cope with rising housing costs.

Actually, the number of Minnesota renter households paying more than half of income for housing is not in the hundreds -- it is about 110,000. More than 20 percent of Minnesota renters are so cost-burdened. For the lowest-income renters, those likely to live in the older apartment buildings now exempt from the sprinkler requirement, the percentage paying more than half of income for housing jumps to 60.

With today's low vacancy rate, particularly for the most affordable apartments, the cost of mandated sprinkler systems would be passed along to tenants. With an estimated upgrade cost of $5,000 per apartment, this would place a significant burden on those least able to afford it.

But is this safety vs. affordability tradeoff a choice that lawmakers have to make? Maybe not. The federal government is likely to spend hundreds of billions of dollars in 2009 to shore up the nation's infrastructure and put people to work.

And what is infrastructure? If it means the basic physical makeup that enables a community to function, I argue that housing fits the definition. Fortunately, for the most part the free market has provided communities with the needed housing component of infrastructure. But there is a sizable and growing segment of the population for which the market cannot provide homes that are both affordable and safe.

Through a new stimulus package, Congress should send money to local governments to, in turn, provide owners of lower-cost apartments grants to make housing safe and more energy-efficient.

This would address a fundamental problem for rental housing where tenants pay utilities: Owners lack any incentive to make energy improvements, and tenants lack the authority and resources to pay for them.

By paying housing rehab costs, the federal government gets a significant employment bang for the buck. A 1996 study of the economic impact of rehabilitation identified 15.6 construction jobs and 14.2 jobs created elsewhere in the economy for each $1 million spent on rehabilitation.

In comparison to capital-intensive highway projects, which take years of planning, housing rehab employs more people and can put money into the economy quickly. Furthermore, a number of housing rehab jobs are relatively low-skilled, giving people a first step into the job market.

The Burnsville fire points to a social predicament in which government officials must choose between safety and affordability. There is an alternative, but we need Congress to understand that housing is a critical component of community infrastructure and that the updating of older housing is a great job producer.

Chip Halbach, St. Paul, is executive director of the Minnesota Housing Partnership.

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