Minnesota seniors strike back against soaring rents

Marjorie Wood, who is 81 and relies on an oxygen machine to breathe, feels pangs of anxiety each time she contemplates her imminent move to a smaller apartment.

Richard Johnson, 77, is a former business owner and U.S. Army veteran who never imagined asking for a handout. Now he's visiting an emergency food shelf.

And Darlene Blodgett, 86, has given up on plans for retirement. She rises at 4:30 a.m. each weekday to drive children with disabilities to school, in part because she needs the money.

Their lives have been thrown into disarray by a steep increase in rent at a sprawling senior community in Coon Rapids — River North Senior Apartments — that long has touted itself as affordable for seniors. This summer, one of the state's largest affordable housing developers, Plymouth-based Dominium, raised monthly rent by 12% at River North and more than a dozen other senior apartment buildings in the Twin Cities, which together provide housing for more than 2,500 low-income seniors.

The rent hike was near the maximum allowed under the rules of a federally subsidized housing program — and was made to keep pace with rising operating costs at Dominium's many properties.

Yet the higher rents have galvanized this close-knit community of nearly 200 seniors into action. In recent weeks, they have blanketed elected officials with letters, emails, phone calls and public testimonials highlighting the choices they now face between paying the rent and affording basic necessities.

Drawn to the building's many amenities — including walk-in closets, a fitness center and hair salon — many residents said they sold their homes and moved into River North expecting to spend the rest of their lives here. Some say they feel betrayed; that they moved into the senior community based on verbal assurances that the apartments would remain affordable and rent increases would be modest.

The 12% rent hike is more than double this year's increase in Social Security benefits of 5.9%, and comes as seniors on fixed incomes are struggling with rising prices for everything from gas to milk to Medicare premiums. Some residents at River North say they are now skipping medical visits and even food to pay the rent. To avoid eviction, residents say they have been forced to dip into their retirement savings and pensions. An emergency food shelf in Anoka reports that it currently serves at least 16 households at River North, and has seen an influx of visitors from the complex since the rent was increased.

"It's tearing this community apart," said Blodgett, who has watched several neighbors move out of the building.

The River North complex is among 15 senior apartment buildings in the Twin Cities that was developed under the low-income housing tax credit, a program that provides a federal tax break to developers who are building affordable rental housing. Under the program, also called "Section 42," rents are tied to median household incomes in the surrounding area; and renters must demonstrate they earn at or less than 60% of that area income.

In April, the U.S. Department of Housing and Urban Development (HUD) sharply increased its estimate for median incomes in the Twin Cities, allowing for the rent hike at Dominium's properties. However, as tenants and several elected officials have emphasized, seniors on fixed incomes are not benefiting from these income gains, which means the higher rent is eating away at their already strained budgets.

Charlene Golgart, 72, said the $1,500 rent on her two-bedroom apartment now exceeds her monthly Social Security check by about $40. To make ends meet, she has put off plans for retirement and works part-time at a day care center for children. "How long can this continue before we are bled dry of every limited financial resource that we have?" Golgart asked. "The reality is, they're pushing out all their low-income tenants."

Dominium, which manages 38,000 apartments in 19 states, did not make anyone available for an interview but provided a written statement explaining its rent policies.

The developer said the rent increase is needed to keep pace with rising expenses and to prevent its buildings from falling into disrepair. The developer said taxes, insurance and other costs have outpaced inflation and rent collections for the past decade. In addition, Dominium noted that only about a third of its 2,526 senior households will experience the 12% increase before year's end. That means a majority of Dominium's senior tenants will start receiving larger Social Security checks next year before their rent increase occurs. The federal government will announce its annual cost-of-living adjustment to Social Security benefits next week and it is forecast to exceed 8% — the largest increase in four decades.

"Previous experiences with affordable housing... demonstrated the perils of consistently low rent levels that did not move with the economy," said Paula Prahl, executive vice president at Dominium. "These housing developments became dilapidated, provided poor experiences and were rarely welcome into communities, especially communities that otherwise provide strong opportunities for residents."

But seniors at River North are refusing to quietly accept the increase.

Their once-festive Friday night "happy hour" near the fireplace in the River North's community room is now dominated by discussions over how to push back against the rent increase. Last week, a group of senior tenants showed up at a Coon Rapids City Council meeting and demanded that officials strictly limit rent increases for any developer that benefits from taxpayer subsidies. In 2016, Dominium received a package of local incentives — including $1.4 million in tax-increment financing and a $300,000 deferred loan — to develop the River North complex.

"Remember, we are extremely poor," said Janet Bragelman, 74, a River North resident who arrived at the council meeting with her walker and pounded the podium with her fist as she spoke. "I'm asking you to use your power to stop this!"

Their grassroots campaign is drawing support from politicians on both sides of the aisle — and comes amid growing concern over the state's longstanding shortage of affordable housing. Statewide, 61% of senior renters in Minnesota pay more than 30% of their income in rent — a level known as "cost-burdened" — that makes it difficult for them to pay for other household necessities. By comparison, just 43% of renters exceed that threshold across all age groups, according to the Minnesota Housing Partnership. The median household income for Minnesota seniors is just shy of $50,000 — a third less than the median income ($71,306) for households across all age groups.

Last month, six members of Minnesota's delegation in Washington — including senators Amy Klobuchar and Tina Smith and representatives Angie Craig, Betty McCollum, Ilhan Omar and Dean Phillips — jointly signed a letter to Dominium, asking the developer to justify the rent increase in light of the federal subsidies it receives. In a separate letter, Rep. Phillips called on the secretary of HUD to investigate the issue and recommend changes to the federal Section 42 program to protect renters, especially those on fixed incomes.

"While Dominium's actions may be allowable under Section 42 rules, it is clear that we should reexamine the program to determine if it is serving the intended purpose," Phillips wrote.