Three Things to Know
Today, Edina has roughly 560 affordable housing units. At the city’s current ratio of growth in affordable to market-rate rental units (8.7%), Edina will need a mind-blowing 7,586 additional household units to yield just 660 affordable units. Is affordable housing driving the population estimates?
Edina’s relatively new Affordable Housing strategy requires 10-20% of new multi-family housing units to meet affordability requirements or developers can “buy-in” to the housing fund. However, in 15-20 years, many of these new affordable units will convert back to market rate (making them not affordable). What do we do then?
The current strategy, allowing units to revert back to market rate, is a short-term strategy. We need a long-term solution: permanently affordable housing. A more cost effective and durable solution could be a public/non-profit partnership in existing older buildings.
City leadership has a flawed affordable housing strategy for two reasons.
They’ve connected density with affordable housing.
It relies on 15 to 20 year temporarily affordable housing.
We need to build permanent affordable housing so we aren’t faced with this same affordable housing issue in the future. Permanent affordable housing is less costly than the temporary affordable housing if implemented correctly.
Edina has asked the Met Council to significantly increase its population and housing stock forecasts in preparation for its 2018 Comprehensive Plan. As we’ll outline below, Edina doesn’t need 44% more housing units by 2040 to satisfy its role in addressing the regional affordable housing crisis. There is a better way.
EDINA’S AFFORDABLE HOUSING STRATEGY.
START HERE, ThEN READ CLOCKWISE
THE HOUSING UNIT MATH PROBLEM
Edina’s relatively new Affordable Housing strategy requires 10-20% of new multi-family housing units meet affordability requirements.
We researched the number of units, both market rate and affordable, that have been constructed or approved starting in 2013. Of the 2,748 units planned/created, 239 or 8.7% were considered affordable housing. Roughly half of these units will revert to market rate in 15-20 years per the developer agreements. The other half are permanently affordable units.
In order to meet its Met Council goal of 1,220 units by 2030, an 8.7% production ratio suggests Edina will need a mind-blowing 7,586 additional household units to yield just 660 affordable units.
Problem: A Flawed Policy Creating a Future Crisis
Imagine our future leaders working on the 2028 Comp Plan or better yet, the 2038 Comp Plan. Let’s assume that Edina achieves its 2030 Met Council target of 1,220 units. By the drafting of the 2028 Comp Plan, many of those units will be converting to market rate during its 10-year planning period, and all non-permanent affordable will be lost by the 2038 planning cycle.
We think you get the picture: an endless building cycle with no meaningful growth in net affordable units.
Simply put, it’s bad public policy to exchange “community benefits” (density waivers, TIF, etc.) for 15-, 20- or even 25-year temporary commitments to affordability. If Edina is serious about the affordable housing problem, we need permanent affordable housing.
Solution: Limit Public Investment in affordable housing to permanent providers only.
We can achieve our affordable housing goals without overpopulating our city. Building new affordable housing units is very expensive. A more cost effective and durable solution could be a public/non-profit partnership in existing older buildings. Edina has 9,333 multifamily housing units. By identifying and converting a mere 7% of those units, the 2030 target is achieved. Even more important is establishing the right strategy — one that produces a growing base of permanent affordable housing units we can deliver to future Comp Plan planners. We certainly don’t want them to inherit our very expensive mistakes.
Our team has delivered these observations to the city through various means with no response.
7200 France Case Study
On March 19th, 2019 a portion of the $28 TIF District is planned to fund 62 affordable housing units at 7200 France Ave for a 25-year term.
The city’s $8.7M cost for the 62 units over the life of the TIF district is $139,749 per unit. If we eliminate the interest expense, the upfront cash cost is $95,800 per unit. What if we could instead co-invest with qualified non-profits to buy permanency for $96,000 per affordable unit?
Buying vs. renting for a 25-year term at $96,000 per unit is a much more sustainable solution for affordable housing.
An interesting TIF Component - the 10% fee
Edina will be paid a $2.8M (10%) fee for establishing this 7200 France TIF district. No wonder our Mayor, Council and city management are so fascinated with this financial leveraging tool. That might might explain the “lets make a deal” attitude that permeates the planning commission and economic development staff.
We need sustainable long-term solutions.
The proposed 2018 Comp Plan unwisely and recklessly connects population and household unit growth with housing affordability. We, as a community, can address the affordable housing crisis without unnecessary densification, and public benefit giveaways (TIF, density waivers, traffic consideration waivers).
We appreciate the efforts of the affordable housing activists in our community. They have raised awareness and urgency. Our hope is that they can balance this passion and embrace practical, durable and cost-effective solutions.
The road to Edina’s future traffic and density hell will be paved by today’s good intentions. We can do better.