We had the honor of serving as commissioners of the Minnesota Housing Finance Agency for much of its 50 years in Democratic, Republican and Independent administrations. We helped steward “a grand housing alliance” of government, philanthropy, business and nonprofits that has made Minnesota a national leader in housing and community development.

Yet never have we been more concerned about the state of housing in Minnesota. We need a new and renewed commitment to homes for Minnesotans with the speed, scale and intensity required.

Here’s why Minnesota needs to make a major investment in housing this year, alongside education, health care and economic growth. Investments in stable homes increase the positive impact of other investments. Kids don’t learn without stable homes. Stable homes keep people out of expensive emergency rooms. And a growing economy depends on affordable homes near jobs.

Why is there a housing crisis?

Our current housing crisis is rooted in the 1980s when the federal government dramatically cut back its support for housing. Subsequent federal and state commitments have been critically important, but not resourced to scale. The Great Recession (2007 to 2009) and its aftermath, the pandemic, and now higher inflation and interest rates have all added to the crisis. Here is where we are now:

• Housing production in Minnesota plummeted with the Great Recession (from more than 25,000 units in 2006 to fewer than 10,000 in 2011). The pace has picked up (almost 34,000 units in 2021), but not enough to keep up with household growth and to replace lost units.

Because we still don’t have enough housing, rents and house prices have risen rapidly as demand has outstripped supply. Now, rising interest rates and construction costs have developers and builders pulling back again, and a new production bust looms.

• Those with moderate incomes ($55,000 to $35,000), the working poor ($35,000 to $20,000) and in those deep poverty ($20,000 and below) are affected the most by this shortage. Only about 1% of new rental units are affordable to the working poor and those in poverty.

• What’s worse, we are losing housing with affordable rents faster than it is being produced. In the Twin Cities, 52,000 units were lost between 2013 and 2019, while only 7,762 new units got started. Much of this loss is due to rent increases after rehabilitation of older apartment buildings.

• The surge of pandemic-related temporary resources is ending, so we are sliding down a cliff. In June, eviction filings for 2022 were up by 50% over the pre-pandemic level, with significant additional increases projected. It is heartbreaking that family homelessness is increasing again, reversing recent progress.

• The costs of operating housing (utilities, insurance, property taxes) are increasing, resulting in a frustrating combination of unsustainable rent increases for tenants and operating deficits for owners. Many of the organizations that develop and operate affordable housing are stressed to the breaking point.

• Tragically, maddeningly, it has become harder to reverse the long-standing systemic racism in housing policy and markets. Minnesota’s homeownership gap between whites and Blacks remains among the highest in the nation.

How can we respond to a house-on-fire crisis?

We know what to do. The comprehensive report from the Governor’s 2018 Task Force on Housing provides a template (mnhousingtaskforce.com). We can:

• Preserve our existing affordable homes, including those “naturally occurring” in the private market, and federally assisted housing that leverages of millions of dollars. Also, provide support to preserve the organizations that manage this housing.

• Produce more homes, particularly for essential workers, those most in need and first-time homebuyers.

• Innovate to achieve scale, speed and efficiencies in building and preserving housing. It takes too long and costs too much to get new projects started. We need incentives that encourage communities to approve projects more quickly, and we need to support innovation in how we build housing, including modular construction and other innovations that leverage and grow our construction workforce. We need the private sector to build basic housing that more people can afford without public subsidy. Housing agencies should partner with owners and developers to streamline policies and processes.

• Provide more resources to housing. Simply stated, Minnesota needs to make a major investment in housing now to keep from falling even further behind. We have good programs and strong delivery networks of communities and developers. But this year Minnesota Housing could only fund one project for every three proposals submitted. The significant projected state surplus is an opportunity to make a major commitment to housing at a time when less than 1% of the state general fund budget is devoted to housing.

Now is also the time to identify and establish an ongoing dedicated funding source for housing. Like roads, bridges and environmental investments, affordable homes are a long-term investment requiring a stable source of resources. Colorado just set a good example in the recent election by dedicating a portion of income taxes for housing, which will raise $300 million per year. Finally, as government does more, so should foundations. The cost — human and financial — of solving the housing crisis will only increase. Investing today to avoid spending more tomorrow is sound stewardship.

The last time housing was identified as a top issue by the governor and Legislature was 1971, when the Minnesota Housing Finance Agency was created. Over the last 50 years state support has been “good enough,” and the rest of the “grand housing alliance” made it great by leveraging billions in federal resources with private, philanthropic and local public investments and established Minnesota as a leader. But that won’t cut it now.

The governor and the Legislature must lead on housing as no governor or Legislature has before in 2023. Good intentions mustn’t be whittled down to “good enough” in the final days.

Legend has it that during the jockeying for priorities in the New Deal, FDR told one group: “You’ve convinced me. Now go make me do it.”

We can make our leaders “do it” if all of us together make affordable homes for all Minnesotans a top priority.

Jim Solem served as commissioner of the Minnesota Housing Finance Agency from 1978 to 1993, Kit Hadley from 1994 to 2002, Tim Marx from 2003 to 2008 and Mary Tingerthal from 2011 to 2018.


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