Developer Steve Minn talks about making affordable housing work

During the 1990s, Steve Minn served on the Minneapolis City Council and later in Jesse Ventura's administration as commissioner of public service and commissioner of commerce, but for decades he has been an active, outspoken and sometimes controversial housing developer in the Twin Cities metro area.

Minn, a co-owner and CFO of Lupe Development Partners, is now one of the most active affordable-housing developers in the Twin Cities metro. The company has six income-restricted projects with a combined 750-plus units in the pipeline including several that are along transit lines.

Minn isn't going it alone. He's partnering with other developers and is partnering with several community organizations and service providers. We asked Minn about Lupe's strategy.

Q: Is affordable a new focus?

A: We've been doing affordable housing as part of our mission since 2004. We did Stone Arch Apartments in Minneapolis with a component of affordability. Slowly, over the last eight years, I've produced another 1,200 units of affordable housing quietly sort of under the radar in the metropolitan area, most of it with partners.

Q: You agree that there's an affordable-housing crisis, but you disagree with attempts to solve it, especially in Minneapolis. Can the private sector do anything to help?

A: I do think the private sector can overcome the housing crisis if we just put enough effort at it, and they put enough money at it. We can get it done.

Q: Are there any common themes among your latest projects?

A: We are really focusing on transit corridors. The closer we are to mass transit, the less reliant on a single-occupancy vehicle we are, the less cost I have to expend in putting parking into those buildings and that is that is the single biggest drain on resources other than property taxes on these affordable units.

Q: Give me an example of how it works in your favor.

A: On the two projects that we have on Lake Street — phase 1 goes in the ground this April, the second one hopefully next year. We are under-parking both of those. Probably each of those buildings is going to have 111 units of housing, and we're only going to put 55 parking spaces in each building. That's half [of what you'd normally have].

Q: Given that people are so car-dependent, why are you willing to take the risk?

A: Because of our proximity to the Lake Street BRT [bus rapid transit station] and the new light-rail station that's being built at Lake Street and 35W. We are less than half a mile away from that station. So we look at it and we say, "OK, we're going to roll the dice on this."

Q: When you say you are going to roll the dice on this one, what does that mean?

A: There's always a market risk that you don't have enough parking for a potential renter whether they are affordable in their price points or not. If they have a job that requires a car and they can't use public transit there's a risk I could potentially lose that renter. Underground parking is $25,000 and on its way to $30,000 per stall and we don't get money back on that. So moving away from them is one part of our strategy.

Q: Have you ever done that before?

A: I did a little bit of that when we first built Stone Arch apartments, the first affordable deal we did back in 2004. Back then the parking ratios were much higher than one-for-one. I had 455 bedrooms at that complex and I only had 200 parking spaces and it worked because we were close to the Stone Arch Bridge and downtown and bus service.

Q: This parking ratio situation has been a contentious issue among communities and developers, are there places in the metro where it's not an issue?

A: I think the suburbs don't have this problem because they have so much more land. When you're doing dense development in the urban core you don't have the room for parking, you just don't.

Q: Are there other challenges when you're doing infill development in Minneapolis?

A: You're also dealing with polluted sites. Four of the six projects we're working with have some form of soil remediation or pollution cleanup.

Q: What else should government and nonprofits be doing?

A: Nonprofits serve a very critical function. They attack the much lower-income or needy populations. They're set up with social service agency partnerships and can attack that truly homelessness component out there that the private sector cannot always address without a deep subsidy. So our partners in developing affordability in the community are the nonprofits that tend to take more homelessness and more low-income people.

Q: So when you move further into that direction are you also having to provide the same kinds of support services that the nonprofits do?

A: Yes, we will contract for them. I don't have that in-house. But there are agencies that we can contract with to do that and the funding sources come with the program for social services.