From left to right: Mayor Gene Maxwell of Hopkins, Minnesota; Mayor Betsy Hodges of Minneapolis; Mayor Nora Slawik, Maplewood, Minnesota; and Mayor Christopher Coleman of St. Paul, Minnesota during a session called “Creating a Great Region: Housing Opportunity and Talent Attraction” at the Housing Opportunity Conference in Minneapolis.
The Minneapolis/St. Paul metropolitan region is home to 20 economically diverse Fortune 500 companies—among them Medtronic, 3M, and General Mills—which are talent magnets and drivers of economic growth. Crisscrossed by a network of trails and dotted by lakes and parks, it offers ample recreational opportunities and a high quality of life. Progressive local and regional governments have enthusiastically supported light rail and encouraged development near transit nodes.
What also makes the Twin Cities stand out is their affordability relative to other cities of comparable size. The region maintains a reputation as one where upwardly mobile young people across the income spectrum—from young professionals renting market-rate apartments to moderate- and low-income families looking for affordable housing—can find a decent place to live without being highly cost-burdened.
But population growth and a market playing catch-up to meet pent-up demand threaten the region’s affordability, according to a panel of mayors from the Twin Cities that kicked off the 2015 ULI Housing Opportunity Conference in Minneapolis. At 2.4 percent, the Twin Cities metro area has one of the lowest vacancy rates in the nation, and rents are rising fast. Dozens of new residential projects dot the skyline and infill development of single-family homes continues, yet home prices are still rising faster than incomes.
“Those of us who focus most of our day on affordable housing are a bit scared about the future,” said Mary Tingerthal, Minnesota housing commissioner and discussion moderator.
St. Paul Mayor Christopher Coleman echoed that sentiment about his city, which is undergoing a surge of new residential and commercial development in downtown and along the new Green Line light-rail corridor. St. Paul has historically taken a back seat to Minneapolis in terms of desirability, but the Green Line—which connects downtown St. Paul to downtown Minneapolis—is attracting new interest from investors.
Roughly 13,700 new housing units have been created or are planned within half a mile (0.8 km) of the corridor, according to the Metropolitan Council, but most are market-rate or luxury units. Just under 2,400 are affordable, aimed at those making 60 percent or less of the average median income for the area.
“The issue to me becomes less about whether we’re attracting people, but whether we can maintain any level of affordability in these places,” Coleman said. “Right now, we have one of the best ratios of median income to median housing costs in the country. That’s a huge competitive advantage for us . . . but at some point, if we continue to see the trend that we’re seeing, we’re going to be pricing millennials out of being able to afford to live in our downtowns, in our core areas where the jobs are.”
Demographic changes are forcing leaders around the region to ask not only if an adequate supply of housing exists, but whether it is the right type of housing for an aging and increasingly minority-majority population.
Coleman noted that the housing in St. Paul’s historic neighborhoods does not meet the needs of individuals with mobility challenges—an issue that came to light when a couple tore down their home with the hope of building one that was more modern and accessible. Such so-called teardowns have sparked controversy, yet are a natural reaction to houses that do not support current lifestyles or future phases of life.
“[T]here’s a conflict between preserving the community that we’ve historically known and the need to change and have adaptive housing,” he said. “It means having more density; it means having more houses that have smaller footprints; it means houses that don’t look like the houses we built over the last century.”
Minneapolis Mayor Betsy Hodges has an ambitious goal of adding 100,000 new residents to the city during her term, taking Minneapolis over the 500,000 threshold and restoring its population to what it was in the mid–20th century. Along with millennials, immigrants and ethnic minorities are drawn to Minneapolis for its low cost of living and educational opportunities; the city’s housing will have to adapt to the evolving needs of newcomers while retaining its affordability.
Much will also need to be done to correct long-standing disparities in housing and quality of life between white residents and people of color—a population that will continue to grow in the Twin Cities, Hodges said. More housing that accommodates larger or extended families that is also compact and transit-oriented, for example, may be needed.
“We know . . . that the strategies for the future are not the strategies we have used in the past,” said Hodges.
One of the ways the Minneapolis City Council has attacked the problem is by removing zoning restrictions to stimulate the market to create the types of housing that will accommodate Hodge’s vision of a more diverse and sustainably built Minneapolis.
This summer, the council passed two provisions that Hodges hopes will encourage denser development both in established residential neighborhoods and along transit lines: the first will allow private homeowners to build accessory dwelling units next to their homes, while the second reduces parking requirements by 50 percent for multifamily projects within half a mile (0.8 km) of rail service to 0.5 space per unit (it is currently 1:1). Both initiatives were spearheaded by council member Lisa Bender, who also participated in the conference as a panelist.
Parking may not seem like a big deal, but it adds significant cost to renters in the Twin Cities due not only to construction but also to energy costs, since underground parking garages must be heated during Minnesota’s brutally cold winters. The new law beefs up Minneapolis’s current policy of waiving parking requirements for all residential projects built within downtown zoning districts, in place since 2009. A future with fewer cars means that the city can better leverage the significant investments it has made in transit, Hodges said.
“We need to do the work necessary to keep the affordability and the attractiveness of housing for the future workforce,” she said. “There are growing pains as you shift away from policies of the past, but it’s necessary if we’re going to stay competitive in the global—let alone national—environment.”
Older suburban communities throughout the Twin Cities region also are pressed to develop new housing choices that are affordable, but greenfield development is not an option since these cities are fully built out.
Maplewood, a first-ring suburb of St. Paul, is home to 3M’s world headquarters, and aligning Maplewood’s goals with those of 3M is key to its competitiveness, said Mayor Nora Slawik.
This means ensuring the vibrancy and diversity of its housing stock, accomplished through the redevelopment of old sites and existing neighborhoods. The historic Gladstone neighborhood, for instance, is being redeveloped to include a mixed-use development with 192 units of housing and 6,000 square feet (557 sq m) of commercial space, converted from a vacant bowling alley. Two transit lines are being proposed to go through Maplewood, which Slawik says will help the city maintain its competitiveness: “We think that is definitely going to help to keep and attract talent.”
The city is also encouraging current homeowners to invest in improving their homes so that Maplewood attracts new families. Yet Slawik acknowledged the “growing problem of suburban poverty” faced by cities like hers as lower- and moderate-income residents are pushed out of Minneapolis and St. Paul.
The western Minneapolis suburb of Hopkins shows that low homeownership rates do not translate to a low quality of life. Sixty-two percent of its housing stock is rental, according to Mayor Gene Maxwell, which makes Hopkins a haven of affordability. The city has invested heavily in redeveloping its downtown with $25 million in new infrastructure and other improvements. Hopkins continues to attract residents because of its network of trails and bike paths, which makes the suburb both well connected and accessible to downtown Minneapolis and St. Paul.
It is true that Hopkins has gotten many things right, but the Twin Cities region as a whole faces some tough questions ahead. All the mayors agreed that only a regional approach to closing disparities in housing and economic opportunity will work. “The city of Hopkins can be successful, but without a successful region, we’re not going to accomplish what we really want to accomplish,” Maxwell said.
