Developers building homes in Bloomington will be required to offer at least 9 percent of them at affordable rates, under an ambitious new ordinance.
With that stick comes a carrot: Developers can choose from a range of incentives and tools that would trim their building costs.
The incentives are as important as the requirement, said Eric Johnson, the city’s director of community development.
“This is not an us-against-you sort of fight that we’re after,” he said. “We’re after solving problems … in the spirit of cooperation.”
City officials devised the new law over a couple of years of task-force studies and meetings with developers, affordable housing experts and other stakeholders. The ordinance, which the City Council passed Monday night and goes into effect in six months, applies to those building or renovating 20 or more units of multifamily or single-family housing.
“Bloomington’s mixed-income housing policy is the strongest and most specific policy I’ve seen yet in the metro,” said Tara Beard, a housing planning analyst in the Metropolitan Council’s Community Development Division. “It is the first I’m aware of that puts the affordable housing requirement at the forefront, then provides a menu of options to make it feasible.”
The menu includes reduced requirements for parking spaces, storage space, unit sizes and building materials, as well as fee waivers and financing options.
The more units builders construct at affordable rates — or the more affordable they make them for lower-income families — the more of these incentives and tools developers would be entitled to use. Builders also receive extra incentives for including the units at the same site as the market-rate units.
The law also allows developers to contribute land or money to an affordable-housing trust fund, at $9.60 per square foot of market-rate housing they build, in lieu of building the units themselves.
“Affordable housing” is an official term for housing that fits the budget of a household earning less than the area’s median income, which in Bloomington is about $94,000 for a family of four. A home is considered affordable if rent costs no more than 30 percent of a family’s monthly income.
The average market-rate rent for a two-bedroom apartment in Bloomington is $1,800 a month.
With incomes remaining relatively stagnant as housing prices rise, cities across the state and country are experiencing shortages of affordable housing. According to a 2018 state task force report, more than 25 percent of all Minnesotans and more than 45 percent of renters are burdened by housing costs, meaning they spend more than 30 percent of their income for housing.
Many cities are developing programs to help, such as offering tax-increment financing to builders, allowing increased density or establishing trust funds, said Daniel Lightfoot, intergovernmental relations representative for the League of Minnesota Cities.
Few cities, however, have outright required developers of market-rate housing to contribute affordable housing.
“It’s an idea that’s catching on [around the country], but it’s still fairly rare,” said Ed Goetz, director of the Center for Urban and Regional Affairs at the Humphrey School of Public Affairs.
Even after the ordinance goes into effect, Johnson said, city officials will continue working with developers to evaluate it and adjust it if needed.
“This is something we’ve worked on for a long time and something we will keep working on,” Mayor Gene Winstead said.