The region’s supply of naturally occurring affordable rental housing (unsubsidized) is at risk. National investment companies have turned to the Twin Cities market seeking investment opportunities and are
increasingly buying up Class C apartment properties. In many of those cases, the new owners are then repositioning the buildings in the market—undertaking rehab, adding amenities to appeal to more upscale tenants, dramatically escalating rents, toughening admission standards, ending or cutting back involvement in government programs like Section 8, and generally attempting to move the building more upscale. The result has been a dramatic reduction in the supply of affordable housing and the
involuntary displacement of many lower income households, who find themselves competing for an ever smaller supply of affordable housing. In one recent example, the Crossroads apartments in Richfield, 700 units of deeply affordable housing have been converted, which, effectively canceling out virtually all of the gains from new affordable units built in the Region in 2014.

Also contributing to this threat are the escalating land values in parts of the Region where strong market conditions exist or where the construction of public amenities like transit lines will likely enhance value over time.

Given that this housing is privately owned and not subject to rent and income restrictions associated with subsidized housing, what can be done?This memo is an attempt to begin a discussion on possible strategies and policy responses.

Download the memo.