Action needed now to address Minnesota's housing shortage

It's hard to question the credibility of Montevideo, Minn., Mayor Debra Lee Fader when she talks about the connection between housing and the vitality of communities. The civic leader and business person's knowledge of the issue is firsthand. She hasn't been able to find a home she and her husband can afford since they sold the Sportsmen Inn, the motel they operated.

Now, Fader is seeking to drop her re-election bid. She told a reporter that "she didn't feel right about campaigning for mayor when she couldn't be certain she would be able to find a place to call home."

Her challenge isn't unique to her or to Montevideo. Communities around the state are facing similar circumstances. Austin City Administrator Craig Clark recently told the Austin Daily Herald that continued economic growth and prosperity in his southern Minnesota community depends on a robust housing market.

"We just don't have enough [housing] and therein lies the problem to being able to grow the community," said Clark.

Minnesota has built a reputation of livability and opportunity. The availability of affordable homes has been a key competitive edge in attracting families and businesses to the state. Now, the cost of renting or buying a home is rising faster than the incomes of many Minnesotans, and that's making it hard for employers to attract the new workers their businesses — and the communities they serve — need to grow.

According to the real estate site Zillow, Minnesota home values have increased nearly 7 percent in the past year. Zillow estimates they will rise almost 9 percent within the next year. Homes in Minnesota are 26 percent more expensive on average than in neighboring states. Meanwhile, the real median household income in Minnesota peaked in 2000 at more than $75,600. By 2016, it was $70,200 or 7 percent less.

In part, housing availability and affordability has become a challenge of supply and demand. The Twin Cities area has added nearly 226,000 residents since 2010, an increase of about 8 percent. Housing production hasn't kept pace with population growth.

In fact, the Twin Cities now has a housing production shortfall that is behind only San Francisco and Atlanta, according to the Metropolitan Council. Rental vacancy rates have stubbornly stayed under 5 percent in recent years, forcing rents in the Twin Cities to grow three times faster since 2010 than if they had simply matched the rate of inflation.

And while becoming another expensive megapolis doesn't top the concerns of communities like Montevideo or Austin, civic leaders and employers throughout the state recognize that a good mix of housing is essential to a vibrant community. "We have to start thinking about housing as community infrastructure just like sewer, streets and water," Olmsted County's David Dunn recently told the Rochester Post-Bulletin.

It's against this backdrop that the Minnesota Housing Task Force — a panel of private and public sector leaders — spent nearly a year listening to residents, employers, developers, policymakers and others around the state. Based on what members heard and on the expertise of the task force members, a comprehensive set of recommendations was developed. They generally fall into three buckets:

• Regulatory reform: Eliminate unnecessary regulations, improve efficiency of government departments and cut red tape. In short, make housing more affordable by removing roadblocks that increase production costs.

• Innovation: Encourage the creation of new building technologies, new financing methods, new ways to use logistics expertise and new ways to train and deploy construction and building trade talent.

• Public and private resources: The report calls for additional spending by government, philanthropy and the private sector. New investments are needed, but history has shown that investments in housing by government, private sector "impact investors," foundations and others has a great return in economic growth and a healthier, well-educated population.

The full report of the task force can be found at frontdoorcampaign.org; it is an important read for those who care about Minnesota's future — a future of opportunity if housing becomes a statewide priority.

The task force cites the need to add 10,000 homes every year for the next five years above current levels and presuming Minnesota does a good job of preserving existing homes. This commitment has the direct economic benefit of generating $3.2 billion in new investments and 30,000 jobs for every 10,000 new homes built in Minnesota.

These recommendations won't become reality without the support of Minnesota's employers. There is no better time to get involved than right now. Minnesota will elect a governor and the state House in November.

The message for candidates from businesses and communities that want to remain economically vibrant can be put no better than Mayor Fader's simple truth: "If you want to grow, you have to have a place for people to live.''

Jeanne Crain and Acooa Ellis co-chaired the Minnesota Task Force on Housing.