Housing Visions and Shortsightedness
By Doris Rubenstein, PDP Services
Minnesota Business, May, 2002

It seems that workforce housing is getting a lot of attention these days from many different sectors of our community.

In November, 2001, Housing Minnesota organized the first Minnesota Housing Convention. The economic impact of workforce housing was underscored by the results of a recent study, called “Workforce Housing: The Key to Ongoing Regional Prosperity” prepared in September 2001 by Maxfield Research for GVA Marquette Advisors/Real Estate Counselors. The report brought out these points:

• Job growth will create the need for 26,800 new workforce units over the next five years.
• Private developers may lose about $31,000/unit for owner units, and $43,000/rental unit. That means there is a need for about $1.5 billion in gap funding.
• The metro area loses $128 million in consumer spending, and $137 million in income from the prospective workers who cannot find housing.
• A $1.5 billion subsidy for new workforce housing will generate a net gain of $12.2 billion to the regional economy over the next fifteen years, or $8.13 in economic benefits for $1 invested.

This particular conference was unique in that nearly a third of the participants were connected in some way to businesses in housing construction and development. Few other recent workforce taskforces, representing local and state government units, non-profit institutions, and faith-based organizations, can boast such participation. In fact, there’s seems to be a disconnect between the advocates for workplace housing and those who can provide it?

The Minneapolis Regional Chamber of Commerce recently appointed a high priority task force to address workforce housing. Let’s look at who’s on the Chamber of Commerce task force. There are 29 members: Five represent non-profit organizations, none of which are dedicated to housing. Three are connected to government. Two are part of educational institutions. The rest are businesses. It’s a good mix of finance institutions, builders and developers, and consultants with a good smattering of other high-profile companies mixed in.

Now let’s look at some of the coalitions for affordable housing and who is involved with them.

• The Family Housing Fund lists of officers and directors have 23 members. Four are from business (none in construction or housing management), ten are from government, and the rest are non-profits.
• The Minnesota Housing Partnership board of directors lists among its 18 members four for-profit institutions on the board, including one company involved directly in housing: Fannie Mae.
• MICAH (Metropolitan Interfaith Council on Affordable Housing) has one member on its 17-member board who does not represent a non-profit organization: Stuart Management Corporation.

Of the profit-making institutions on these boards, the majority are banks. They provide the mortgage capital for buyers and loans to the builders. In sum: just 9 of 58 board members, or barely fifteen percent, represent those who finance or manage housing and none represent for-profit builders.

That fact is that there is little cross-over between those who represent constituencies who need housing for their workforces, those who will be co-beneficiaries of increased housing by providing services to those new homes, and those who need the homes on the boards of these organizations. Yet they all are concerned with and clamoring for workforce housing.

The need for workforce housing is undeniable. The benefits of investments and subsidies are clear. What we need now is for government, business and housing advocates to find a neutral forum for working together to solve this problem. They must open their respective doors wider, and be more welcoming to differing view and approaches. If they don’t, everyone loses. When they do, everyone wins.