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Launched in 2014 by journalist Sean Baker, Med City Beat is an independent news source covering government, business and culture in Rochester, Minnesota.

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Steve Borchardt: Attractive housing choices essential for growing workforce

Note: This op-ed is part of a series on affordable housing.

The cost of creating a unit of housing for “low and middle income families” (LMI) has surpassed compensation rates and the affordability gap is growing. LMI workers supply essential services that we all require daily. It is a national phenomenon that is more acute in communities experiencing rapid economic growth. We will not grow our local economy or work-force without safe, secure and attractive housing choices. A vibrant and robust housing market is essential to business development.

To produce housing for households with an annual income less than 50% of Area Median Income (AMI), approx. $35,000 ($17/hr full-time job), subsidies are required or these folks will increasingly become homeless. Period.

For households with incomes from 50% - 90% of AMI ($17 - $30/hr full-time job) we need to re-think all aspects of housing. Too much subsidy artificially inflates the market. Strategies must align actual production costs with LMI incomes. Subsidy models should target and incent “proof-of-concept” projects that develop homes and neighborhoods in which the actual production cost meets the buyers’ capacity to purchase.

Solutions:

Accept the Opportunity

Housing must become a community-wide priority for everyone, including all area towns. Every government, business organization, employer and EDA must focus on housing. New and innovative risk-sharing collaborations between government, financiers and developers will be required.

Progress Report: (+) Government and business leaders now acknowledge that focused market intervention is required to address LMI housing. Collaboration is developing rapidly at this point. There is not yet a strong consensus to participating in funding but it is coming.

Own the Solutions

Create a local community housing trust fund (LCHTF) to make low-interest loans and grants to accelerate construction. LCHTF sources: fees, taxes, corporate and individual donations. The State should create a match contribution and a tax incentive program for donation to LCHTFs.

Progress Report: (- +) Not yet; but real close. Acceptance and the “political will” to engage is growing rapidly but we are not there quite yet. This will begin in the coming year. The State legislature will consider a bill in the coming session that will provide State matching funds to a local LCHTF.

Financial Incentives

Tax Increment Financing must be directly tied to production of LMI priced housing or a contribution to the LCHTF.

Progress Report: (+ +) Strong likelihood the City will adopt soon in Rochester.

Comprehensive Planning

Plan and fund housing development and transportation together.

Progress Report: (+ +) Currently is in progress via Comprehensive Plan.

Reduce barriers

Zoning policies, local fees and building codes must facilitate cutting production costs. The National Association of Realtors reports that every $1,000 increase in price disqualifies 139 families from affording that house. We must evaluate the value of fees and building codes that add cost against LMI affordability. A “safer” structure is not helpful to a homeless family that can’t afford any structure.

Progress Report: (-) This is a political “heavy lift." Special interest groups from historical preservation, to energy conservationists, to safety advocates all believe their cause is more important than LMI affordability or refuse to believe their cause impedes affordability. We need a practical “balancing of interests” or we add cost that drives homelessness.

Innovative House & Neighborhood Design:

We must create a sub-$210,000 house with features that make it attractive for the home-buyer.

Progress Report: (+ +) This is happening! Rochester Area Builders has a pilot- project task force that is actively designing a “Sub-$210,000 house” that will have market appeal and, hopefully, acceptability. Rochester Area Foundation is supporting this effort.

Planned Development

Offer incentives to developers to create planned full-service neighborhoods located strategically with transportation.

Progress Report: This is a new and emerging concept. Has possibilities in the next five years.

Future Innovation

Governments, universities and foundations should provide grants and incentives to invent energy-efficient durable homes and assembly methods. In general, we have been building with the same methods the past century. Certainly, there have been individual component improvements but the overall house and construction process has not changed much. Moreover, many “improvements” have added expense with questionable value for the LMI market. In the same way we focus on energy production research, medical research and/or car safety research, we need to invest in encouraging a total re-engineering of house design, materials and construction methods. Building materials, wall, roof, window and HVAC systems along with assembly and shipping methods all need to totally re-invented to meet the future of the LMI market.

Progress Report: Mixed. It is happening on an individual component level but not on a national comprehensive and organized “whole-house” macro level.

Steve Borchardt is a retired sheriff and the current Housing Initiative Director for the Rochester Area Foundation.

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