Laserfiche WebLink
within exclusively rural and rural/town mix <br />counties are well below average incomes in <br />exclusively urban counties. The US Bureau <br />of Economic Analysis demonstrates over a <br />62% earnings gap between entirely rural and <br />entirely urban counties. With low wages <br />impacting the availability at all levels of <br />housing. <br />However, one of the most vexing difference <br />in the housing continuum is the lack of <br />production of market rate housing in rural <br />communities. The lack of market rate <br />production has led to aging housing stock in <br />greater Minnesota cities that hinders <br />economic growth. At least 25% of the <br />housing stock in 34 of greater Minnesota's <br />80 counties was built before 1940 and only <br />four counties in greater Minnesota have 5% <br />or more of their housing stock constructed in <br />2010 or later. The aging owner -occupied <br />and rental housing stock have low assessed <br />values far below any reasonable cost of new <br />construction and thereby translates to an <br />environment where lenders and developers <br />often shy away from new market rate <br />developments because of these valuations or <br />low prevailing rents. <br />The circumstances also mean that the few <br />affordable housing projects that do make <br />their way to greater Minnesota are often <br />notably of higher quality than the average <br />market rate housing stock if they were lucky <br />enough to produce any. Many of these <br />affordable units rent for 20-37% higher than <br />what individuals would otherwise be able to <br />afford in many greater Minnesota cities if <br />they were buying a median valued home of <br />significant age. Though numbers certainly <br />differ, modest market rate units that have <br />been attempted or in some instances <br />advanced in our communities have a per unit <br />cost of $140-$150,000 while a tax credit <br />project with their added soft cost can often <br />reach costs of $225,000 per unit or more. <br />Project costs for workforce housing can also <br />78 <br />become prohibitive for many developers in <br />greater Minnesota due to prevailing wage <br />requirements. While greater Minnesota <br />cities are looking to gain every advantage <br />and stretch limited local resources for <br />housing, more state assistance should be <br />focused to allow rural communities to <br />minimize the financial gap of market rate <br />production. <br />Response: The Legislature should: <br />a) Appropriate funding to state <br />assistance programs serving greater <br />Minnesota to account for the state <br />imposed prevailing wage <br />requirements. <br />b) Require a comprehensive analysis of <br />the state's housing assistance <br />programs to better determine the <br />specific needs of greater Minnesota <br />communities and adjust programs <br />accordingly. <br />c) Change Tax Increment Financing <br />rules to address specific housing <br />challenges in greater Minnesota, <br />including but not limited to, extending <br />the timeframe for pooling <br />redevelopment TIF projects from 5 to <br />10 years to allow more flexibility for <br />rural communities to amass properties <br />and finance projects while removing <br />blight and allowing TIF to be used for <br />workforce or market rate housing <br />production in areas of low market rate <br />production to provide parity at a 25- <br />year duration. <br />d) Appropriate more state resources and <br />establish grant and forgivable loan <br />programs that support market rate <br />and senior housing development <br />proposals in greater Minnesota <br />communities where production is <br />extremely low. <br />e) Work to address the disconnect <br />between communities that follow the <br />Statewide Building Code and those <br />