Agenda - Planning Commission - 04/20/2015 - Special

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Appendix B: Methodology of the Allocation of Affordable Housing Need Definitions and Concepts The following definitions and concepts are important for understanding the methodology behind the allocation of affordable housing need in the Twin Cities region between 2021 and 2030. Low-Income Household: In this process, a household is considered “low income” if its annual income is at or below 80% of the Area Median Income (AMI) for the 13-county Minneapolis- Saint Paul-Bloomington metropolitan statistical area, as determined by the U.S. Department of Housing and Urban Development. Approximately 37% of the region’s households are “low 1 income” under this definition. Household Growth: The methodology relies on Metropolitan Council forecasts of growth in sewer-serviced households between 2020 and 2030. A given community’s growth in sewer- serviced households could be different from its growth in all households if some households in the community are not connected to regional or municipal sewers. Exhibit 1 provides a map of forecasted net household growth for sewered communities. Existing Affordable Housing Stock: The methodology increases the Need allocation for communities with a lower share of existing affordable housing than the average sewered community and decreases the Need allocation for communities with a higher share than that average. We then estimate the share of a community’s housing units that are affordable to households with income at or below 30% of AMI, between 31% and 50% of AMI, and between 23 51% and 80% of AMI—including ownership housing,rental housing,and manufactured 4 homes.These estimates cover all housing units, whether they are publicly subsidized or unsubsidized. Exhibit 2 provides a map of existing affordable housing shares for sewered communities. Balance of Low-Wage Jobs and Workers: The methodology increases the Need allocation for communities that are relatively large importers of workers in low-wage jobs and decreases the Need allocation for communities that are relatively large exporters of workers in low-wage jobs. We estimate this for each community by examining the ratio of low-wage jobs to residents who 1 Source: U.S. Department of Housing and Urban Development, 2007-2011 Comprehensive Housing Affordability Strategy (CHAS) data. 2 Source: 2013 and 2014 MetroGIS Regional Parcel Datasets. We examined the 2013 assessed market value for homesteaded units and classified them as affordable at or below 30% of AMI if the value was $74,000 or less; affordable between 31% and 50% of AMI if the value was between $74,000 and $133,000; and affordable at 51% to 80% of AMI if the value was between $133,000 and $217,000. These are the values at which estimated monthly mortgage payments—including principal, interest, property taxes, and insurance—are no more than 29% of the monthly income for a family of four at these income levels. We then adjusted the resulting counts to better match the Council’s 2013 estimates of housing units. 3 Source: U.S. Census Bureau, 2007-2011 Comprehensive Housing Affordability Strategy (CHAS) data. This data provides counts of units that are affordable to households with income at or below 30% of AMI, between 31% and 50% of AMI, and between 51% and 80% of AMI. (“Affordable” in this context means that the combined cost of rent and utilities is no more than 30% of the monthly income of a household that could live in the unit without overcrowding. The specific threshold for affordability thus varies by unit size and AMI threshold.) We adjusted the resulting counts to better match the Council’s 2013 estimates of housing units. 4 Source: Metropolitan Council, 2013 Manufactured Housing Park Survey. We assume that all manufactured homes are affordable to households with income at or below 30% of AMI. Page - 16|METROPOLITAN COUNCIL