The term �affordable housing� is so meaningless, it is hard to have a useful
discussion. Let me try to break down the problem into 3 parts.
1) For whom do we have an affordable housing crisis?
Mayor Kelly and the Housing 5000 team claim that 20% of the 5000 homes built
are �affordable.� Lets look at the actual housing 5000 production data to
understand how this is calculated:
Housing 5000 Project Score card, 17-March-04
Area Median Income
Income
CLOSED
DEVELOP
Total
%
> 80% of AMI
$ 60,426
1630
1531
3161
59.2%
61% to 80% of AMI
$ 59,680
175
123
298
5.6%
51% to 60% of AMI
$ 44,760
320
461
781
14.6%
31% to 50% of AMI
$ 37,300
329
251
580
10.9%
30% of AMI
$ 22,380
330
188
518
9.7%
Total
2784
2554
5338
For the Housing 5000 folk to claim that 20% of the homes they built are
affordable, they count all of the housing built up to 50% of median income �
or $37,300 of annual income. A family that makes $37,300 per year can spend
$932.50 per month on housing and meet the affordability standards Tom
mentioned earlier.
When I claim that there are plenty of affordable rental housing units
available in St. Paul today, I am using the same affordability standard that
the Housing 5000 team is using. 50% of the AMI � or $932.50 per month of
rent. Open last Sunday�s newspaper and try to find 2 bedroom rentals ABOVE
that price. There are few.
Some of you likely question using 50% of the area median income as the
affordability standard. However, it is the standard set by the city of St.
Paul. When comparing affordability of subsidized versus market rate
housing, we ought to be consistent � don�t ya think?
If the city of St. Paul resets the �affordability� standard to 30% of the
AMI, then I must admit that there are very, very few market rate rentals
available for folk at that income level. Until it is reset, I will argue
that most market rate rentals in St. Paul are affordable.
Affordability versus Availability.
While I admit that few market rate rentals are available to those that make
30% of the AMI or less, I won�t concede that we must build more rentals.
Let me explain why.
Can we agree that if we ignore costs, rental housing is readily available?
If the only issue is affordability, we don�t need to build MORE housing, we
need to make existing housing cost less or supplement low-income families.
Think of it this way. When low-income families cannot afford food, our
government supplies them with food stamps. Our government does not start
subsidizing the purchase of farms, ranches, food processing plants and food
distribution centers solely to create a duplicate supply chain of
�affordable food.�
In housing however, our leaders propose just such a solution. They want to
subsidize builders to create housing that operate in a different financial
realm than market rate housing. The end result is a few developers and
non-profits control the affordable housing market. Not only does this limit
the options of families with low incomes, it is expensive to taxpayers.
Housing �vouchers provide affordable units at a much lower price than new
production programs by relying on older, already existing housing units (the
kind of housing that nearly all households live in).� Claimed Ron Feldmen,
Vice President of the Federal Reserve Bank of Minneapolis in his August 2002
paper on affordable housing. Mr. Feldman later stated that with an annual
subsidy of only $2000 per household we could move most low-income families
from unaffordable to affordable housing using market rate housing.
Remember this: If we provide "rent stamps" instead of subsidizing a few
non-profits and developers, then ALL HOUSING IS AFFORDABLE. The beauty, as
clearly outlined by Mr. Feldman, is that it costs less too.
So, my question to all the �affordable housing� advocates is -- why are you
focused on building? There are thousands of empty rentals in St. Paul
today. Fill em up!
Section 8 cuts.
Tom questioned if the section 8 cuts are due to market rent softening or
forced by HUD. The answer is that HUD cut St. Paul PHA�s budget by about
$3M. This forced PHA to look at budget cutting measures.
St. Paul PHA, after input from HousingLink and their own internal study,
concluded �that rents have declined throughout St. Paul over the last year�
and they will �reduce contract rents by 7%, based on lower rents and
widespread incentives in the market.�
Clearly, the HUD cuts drove the budget crisis, but the specific solution was
taken because data showed that rents have decreased. St. Paul PHA�s letter
to landlords was very clear.
Regards, Bill Cullen
East Side Landlord
P.S. If you read this far, you got further than my spouse!
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