BY JOE HESLA
Minneapolis is an unaffordable place to live for those who are poor and of moderate income. Since 2011, the metro has a net loss of nearly 1,300 affordable units annually. Meanwhile, our rents are skyrocketing. In 2010, the average rent was $941/month. In 2019, the average rent was $1,332. Even more alarming, for new apartments constructed since 2010, the average rent was $1,788. Neither the city nor the open market has solved this escalating affordable housing disaster in Minneapolis and the metro area. Could a return to significant amounts of public housing (housing subsidized by public funds) be a solution to our problem? This country used to have much more public housing than it does now.
Definition of public housing: housing provided for people with low incomes, subsidized by public funds.
In 1933 and 1937, Congress passed two housing laws that ordered the building and maintenance of low-cost housing. After that, public housing gradually went downhill. By the 1940s, the Federal Housing Administration (FHA) had incorporated a practice that created racially homogeneous neighborhoods, i.e., segregated neighborhoods. This practice was banned by the Supreme Court and then outlawed by new laws in 1960.
Integrated public housing ran into opposition from the beginning, though. When public opposition failed (and when Fred Trump got ordered by the federal government to stop discriminating against Africans Americans in his housing projects), “white flight” moved people to the suburbs. In the 1980s, Ronald Reagan cut Housing and Urban Development (HUD) funding by an astounding 40 percent. Cities then had to issue bonds to pay for urban infrastructure. Cities began to operate more like profitable entities to lure high-end developers and real estate companies to upgrade old housing and build “amenities.” More and more, it became a way to attract a wealthier type of citizen to fix the financial problems that all cities were facing.
The Minneapolis Public Housing Authority’s (MPHA’s) website says there are currently 6,259 public housing units in Minneapolis. Is this enough? Consider this. A family of four is below the poverty threshold with an annual household income of less than $24,858. Roughly 20,000 households in Minneapolis live in poverty. This is a significant number by itself. Add to that the thousands of other households that would need public housing.
What does City Hall think? Our Minneapolis 2040 Plan passed by the City Council says that they are committed to public housing. POLICY 33: section i. of the 2040 Plan says, “Preserve, improve, and expand public housing that serves the lowest-income people in our city.” Based on the preceding paragraph, this policy, already in effect, may not be working adequately.
It is true that City Hall has passed some ordinances to increase affordable housing through influencing the new developments of housing by real estate developers. These efforts will be needed if you are concerned about the explosion of luxury condos built in downtown and near Northeast (near St. Anthony Main), as well as in parts of South Minneapolis. November’s inclusionary zoning ordinance is an example of the city’s efforts to legislate the for-profit housing market into providing enough truly affordable housing. Will it be enough to keep our current population from being replaced by a wealthier citizenry? Or do we need something in addition?
Why public housing? Public housing would keep those of us who are low- and moderately low-income residents in the city. Public housing could provide an affordable home for thousands of Minneapolitans. It would also be a stabilizing factor and ballast against the rise of rents. It could be a significant force to slow down the dangerous pace of gentrification. Enough public housing would provide stable homes well into the future here for those of us currently threatened by the predatory housing market and accelerating gentrification.
What would it take for Minneapolis to build more public housing? It would take money. Cities and counties constantly raise money by issuing bonds and then raising taxes to pay for those bonds. Hennepin County issued bonds for Target Field, and we are all paying for it with a .15 percent sales tax (a regressive tax).
If the city can issue bonds to help a private citizen billionaire pay for his stadium, it can also issue bonds to build public housing and raise taxes to pay for it.
How to raise those taxes? There are many ways to tax in order to promote fair housing. The city could increase taxes on the profits and income of big developers. The city could levy a tax on large real estate sales. It could charge a special tax on the sales of individual homes that are purchased and flipped. It could levy a large tax on entities that purchase homes for conversion to airbnbs. This is increasingly happening in the city—you may have one on your block. It could issue a special yearly tax on any apartment building that does not have a certain percentage of affordable units.
The city could also institute policies to promote public housing. It could institute a “right to sell.” This would give a homeowner in danger of foreclosure the right to sell to the city, which would then operate it as public housing. It could instate a “right of first refusal.” This would give the city the first chance to buy any property for sale. Any purchases then could likewise be converted to public housing.
As far as the political will to create more public housing, this writer asked several City Council members if they would support issuing bonds to pay for public housing. By the time of this publication, only Andrew Johnson responded that he was open to the idea.
Across the country, there are numerous examples of progressive tax efforts like those mentioned above.
1) Airbnbs: In Amsterdam, Airbnbs must pay a tourist tax on income from holiday rentals. In Palm Beach, Fla., Airbnbs pay a 6 percent occupancy tax and in Portland, an 11.5 percent tax; there are similar deals in San Francisco, Washington, D.C., Chicago and Philadelphia. In Minneapolis, the rate is only 6.875 percent.
2) Taxing wealth: In Portland, Ore., in 2017, city officials instituted a new CEO pay tax that raised $3.5 million for the city. That local measure brought national exposure to the idea, and San Francisco has explicitly named Portland as its model.
3) Policymakers in San Francisco, Washington state, and at least five other states are proposing to locally tax the pay gap between corporate executives and rank-and-file workers.
4) Closing loopholes: Fix LA, a community coalition calling on Los Angeles city leaders to restore vital city programs and services that have been cut, is urging LA County to force commercial property owners to pay taxes they have avoided through accounting tricks.
5) Other taxes: Bernie Sanders proposed a 25 percent tax on flipping houses.