An In-Depth Analysis of MPHA’s “Strategic Vision and Capital Plan”

(A downloadable PDF of this report is available here.)

On June 6, 2018 MPHA delivered their “Strategic Vision and Capital Plan 2018-2020” to the Housing Policy and Development Committee of the Minneapolis City Council. This document, which was presented to the MPHA Board of Commissioners on May 16, 2018 in spite of a lack of resident and community engagement as required by city, state, and federal rules, lays out MPHA’s plan to end public housing in Minneapolis as it has existed since 1938, using Section 8 to dismantle public housing and displace residents.

Section 8, known as Tenant Protection Vouchers (TPVs), Displaces Tenants

Before we examine the details of MPHA’s latest plans to displace residents, let’s look at how the Section 8 voucher system has failed residents of Minneapolis and across the nation.

Section 8 is a voucher system that low-income residents apply to receive rental assistance.  Recipients take this voucher, and use it to find housing on the private market.  Under the Section 8 system, renters pay 30% of their income for rent. There is a different kind of Section 8, which is called Project Based Section 8.  Under this program, for-profit and non-profit corporations get federal affordable housing funds to subsidize their rental properties for Section 8 tenants. They are called “Project Based” because renters who are living in a Project Based Section 8 apartment cannot move and retain their voucher. Now these housing corporations are moving to the AMI system, which increases rents at a high rate. Low-income families cannot afford AMI housing. Please read our AMI charts, which show why AMI housing doesn’t work for low-income housing.

Studies conducted around the country show that large percentages of Section 8 voucher recipients are forced to give up their voucher because they are unable to find housing using it.  One study in California found that up to 64% of Section 8 voucher recipients had to give up their voucher.  Even those who find housing are not safe.  Section 8 voucher recipients can be displaced if their building owner decides to sell it off to investors who raise the rent. This is exactly what happened at the Crossroads apartment complex in Richfield in 2016 where hundreds of low-income and Section 8 voucher recipients were displaced. Some of these residents are now being displaced again in Bloomington at Normandale Lake Estates as their new homes are being sold off, starting the cycle again. Normandale Lake Estates is comprised of three buildings, each with 75 units.  With an average of 3 people per unit, this means around 225 low-income tenants with Section 8 vouchers are now being pushed out. Tenants who shared their story with us are Linda Soderstrom and a Somali mother with small children. She does not want to share her name.  She, along with her children will be homeless in 30 days because she can’t find housing with her voucher.  This is because of discrimination and racism, and landlords/ developers don’t want to accept Section 8. You can read Linda’s story here.

Section 8 is a voluntary program and landlords do not have to participate if they don’t want to. This means that Section 8 voucher recipients face a lot of discrimination, especially if they are Black, Latinx, and other communities of color, immigrants, East African, or Muslim. Minneapolis recently passed an ordinance that would have made it illegal for landlords to discriminate against Section 8 recipients.  However, landlords successfully sued the city, and the ordinance was overturned.  Even though Section 8 doesn’t work for residents, politicians continue to promote it as a solution.

Section 8 is also more vulnerable than public housing.  In February of 2018, Donald Trump proposed cutting the Section 8 program by $1 Billion.  According to Diane Yentel of the National Low Income Housing Coalition, this would lead to 250,000 people losing their vouchers.  A cut to the Section 8 program would mean residents lose their assistance immediately, but this is not the case with public housing.

MPHA’s Current Plan is to Displace Through Section 8 (TPV)  

MPHA has failed to push their original plans of pushing people out of their homes and selling their buildings directly to private owners, but they did not give up on their privatization plans. Instead, they came up with a plan that doesn’t look as aggressive to people who don’t know about the effects of Section 8. They came up with these plans to say “We are not displacing people right away. ” However, here’s a chart from MPHA that shows that they are planning to transfer 99.99% ownership to private owners: (full document can be found at here.)

MPHA won’t own anything. MPHA will cease to exist as a public agency.  MPHA will create a non-profit (in the above image it’s called “MPHA Apartments LLC”) that will own 0.01% of the property and 99.99% will be owned by private developers. This is clearly not public housing anymore.

Once this happens, people will be moved out. MPHA wants this to happen piece by piece, not all at once because that would embarrass them.  MPHA’s new plan still privatizes, dismantles, and displaces public housing. It’s the same plan, but with a new face.  MPHA is making promises they cannot keep about what will happen after they sell the properties.  MPHA says they will continue to manage their properties after they sell, but in a MPHA board meeting, Greg Russ himself stated that “the investor does have the right to come in and remove the property manager if they feel we’re doing a bad job. So that’s a risk.” Even as property manager, MPHA won’t have control over who moves in because it will be catered to rich, wealthier white people. This is classic gentrification.  Furthermore, if buildings go into foreclosure, any agreements that MPHA and the city signs with these developers when they hand the buildings over to them will be voided.  There will be no legal remedy to save these buildings.

Now let’s take a look at MPHA’s plans to privatize through Section 8

Page 3, titled “Defining the Problem,” lays out MPHA’s strategy and vision for the coming years and decades.

It states: “Consistent with MPHA’s mission to provide housing for low-income families, MPHA must seek new public and private sources of funding to implement a capital plan to preserve MPHA’s low-income housing for the future.”

Here, we will show how this strategy will displace residents, while creating profits for developers.

Let’s start with the first part of this statement:

• The average income for MPHA’s working households is $20,656, while the overall average income is $14,201 and seniors on social security earn $750 a month, 9000 a year.
• All public housing residents pay 30% of their income for their rent. MPHA is pushing Area Median Income housing, which is not the same as income-based public housing. To clear 30% of one income for rent is not the same as 30% AMI for rent.
• Rents that are deemed “affordable” for “low-income families” are not affordable for the average household currently living in public housing.
• MPHA puts the phrases “Inadequate Capital Funding” and “Inadequate Operating Subsidy” in big letters.
• MPHA claims they don’t get enough money from the government to fund repairs, maintenance, and rehab or to cover their administrative costs (like salaries, office expenses, admin expenses, etc.).
• MPHA overstates their lack of capital and operating funding, without asking for money from the State or the City.
• These are all tactics to privatize public housing, which MPHA is pushing while they continue to increase their operating costs by paying huge salaries to senior staff and consultants.

MPHA’s numbers and backlog don’t add up:

• An example of operating funding is the $1 million MPHA spent on private consultants to help develop this plan.
• These consultants say that MPHA has a capital backlog of $127 Million (CSG Operational Analysis), but the graph on page 3 shows a number closer to $140 million.
• MPHA is contradicting their own consultants. MPHA is claiming that there is an additional $13 million in repairs without any proof, audit, or justification for where this number came from.
• Furthermore, through more data requests, DG&PHC discovered that the backlog they claim is not $127 Million, but $112.5 Million. But we have no concrete evidence of where  this $112.5 Million dollars came from. It is not a real number because there is no audit or justification of how MPHA came up with this number. From 2015 onward, MPHA has refused to conduct an independent financial audit on how much the real backlog is.   
• In addition, DG&PHC discovered that MPHA is sitting on a $23 Million dollar surplus that they are not spending on the capital or operating expenses “(backlog)” they claim to have.
• During MPHA’s Special Board Meeting on May 16, 2018 where Greg Russ presented the latest plan to dismantle public housing and displace residents through Section 8 (the “Strategic Vision and Capital Plan 2018-2020”), Greg Russ himself stated “We are in a good financial position with regard to our reserves.”
• MPHA ‘s contradicts itself because they claim that they are facing a financial crisis yet they are sitting on $23 million dollars they refuse to spend on capital or operating expenses.
• Emails also show that there is double billing, and misuse of tax dollars without proper accountability. This shows MPHA is not financially responsible.
• There is no audit to show how MPHA got this number. Resident leaders have requested that the State or City audit MPHA for years, but there has been no accountability because no one will do so.
• At the same time, MPHA wants to use the unverified and un-audited “backlog” public relations narrative to get more tax dollars to invite private developers to take over homes through Section 8.
• They want to privatize our homes and displace us so that private investors and corporate landlords can profit from a land grab by taking over public housing.

MPHA claims that their funding from the Federal government will never increase.

• If you look at the graph on page 3, it shows flat funding from the federal government.
• But, MPHA actually saw their funding for capital repairs go up by about 42% in 2018.
• MPHA Commissioners are actually unhappy about getting more funding because it makes it harder for them to justify their plans to privatize.
• They have been pushing a major PR campaign to claim that they don’t have enough money to maintain their public housing.
• In reality, MPHA has plenty of money. They have been successfully managing public housing for decades.  HUD has even named them one of their high performing agencies and their inspections receive 98 out of 100 from HUD.
• When Greg Russ told the Board of Commissioners on a May 16^th, 2018 special meeting that MPHA would never get increased funding from the Federal government, Commissioner Rosenbaum replied:

“In fact, we increased our amounts of money by a fairly considerable amount.  Well beyond anything we had imagined that we might get.  We are in a very difficult place to change, to make a full strategic pivot based on assumptions which so far have not materialized.”

He goes on:

“Our income stream increased significantly and all of a sudden we have extra money. That’s a very hard place for us to make strategic decisions around.”

• This statement shows that MPHA’s narrative that they don’t have money to keep public housing public is not working.
• If MPHA were short on funds they could approach city or state for funding, but they haven’t.

On page 5, both the “Pilot Programs and Test Initiatives” and “Rehabilitation and Construction” strategies contain references to demolition of public housing, and the construction of new buildings that will not be public housing. These buildings will be privatized through the Section 8 program as we have explained above.

On Page 6, MPHA talks about “resident input at every step,” which is the opposite of what MPHA has done.

• MPHA has not brought this plan to residents, and instead brought it straight to the city without resident input.
• This violates HUD policy, as well as city, state, and federal rules and laws about public participation.
• They talk about resident input from design to implementation, but this has never happened.
• In addition, they have violated their own guiding principles, which they also passed without resident input or approval.
• In the chart, they say they are going to provide resident input for a “Relocation Rights Contract,” “Land Use Restriction Agreement,” “Redevelopment Choices in Support of the Mission” and “resident and legal services engaged in development of documents.” Each of these pieces will displace residents.
• “Relocation Rights Contract” means that residents will be displaced.
• “Land Use Restriction Agreement” means the removal of Declarations of Trust “DOT” that keeps public housing public and prohibits from being privatized. MPHA already asked HUD permission to waive DOT if the city government, and residents approve, but the decision from HUD is still pending.
• “Redevelopment Choices in Support of the Mission” means privatizing public housing through Section 8.
• MPHA has failed to explain what “Resident and Legal Services Engaged in Development of Documents” means. It shows that they plan on using MPHA lawyers to make people sign documents that will displace them as they have done in the past.  Residents will not have access to independent legal advice that will represent them because MPHA knows that residents cannot afford this.
• This is how the system takes advantage of poor people, people who don’t speak English, and people who don’t have the legal expertise to understand MPHA documents.

MPHA also talks about “Property Plans” which means that MPHA has individual property plans, which they are not sharing with residents. Some residents are being told they have to move out, and there is no transparency about their plans.

Pages 5-10, shows that MPHA is planning on privatizing all public housing. They even show the timeline.

• They will start with a pilot project at Elliot Twins and some scattered sites first, beginning in 2018-2019.
• Starting in 2020-2024 they will begin large scale construction.
• By 2025-2029 there will be full scale demolition and construction of new homes, displacing thousands of people.

DG&PHC has shown documentation of these plans to Council Member Abdi Warsame and Mayor Jacob Frey.  But, they are silent and have not passed the resolution and ordinance they promised during the 2017 city elections which would make sure public housing stays public by stopping all types and methods of MPHA’s privatization plans.

Page 14, makes it very clear that MPHA is privatizing and will be displacing residents. They plan on using RAD, which is the same privatization scheme that residents in Glendale rejected in 2015.

• “Subsidy/Funding Conversion” means that they plan to use RAD or another scheme to change the ownership of public housing to private hands.
• “Transfer of Properties” means that MPHA will no longer own public housing. They will create a separate non-profit that will own 0.01% of the property.
• “City Tax Levy” is $95 million dollars in funding that MPHA plans to give to developers who will take over the buildings, instead of using that money to maintain public housing.
• “Private Loans” are regular funding from banks, which will also give banks control over properties if the new private owners fail to make payments or if the properties are foreclosed. Public housing agencies don’t apply for loans because all their funds are tax dollars from HUD, along with local city and state funds.

MPHA says that “Transfering Properties” triggers “Tenant Protection Vouchers.” But TPV’s are just Section 8 vouchers. These will not work for residents. They claim they will protect affordability with Land Use Restriction Agreements, but these will replace Declarations of Trust (DOT), which are the strongest protection to keep public housing public and prevent displacement.

Page 15 – 16, MPHA is lying about the actual rent they are collecting. They are collecting more than they say they are collecting. This chart is  propaganda. They even admit this when they say that it is “Preliminary Estimation for Illustrative Purposes” in red. This means these numbers are fictional.  When you add up these “estimations” and compare them to MPHA’s own data, they don’t add up.  MPHA is underestimating rent in order to push their argument. In meetings with Glendale residents in 2015, MPHA project manager Dean Carlson stated that 89% of the rent collected from Glendale goes towards repairs and maintenance for a larger capital pool for other properties.

Page 17,  clearly shows that MPHA plans to privatize. They plan to “convert the public housing platform to a project-based Section 8 platform.” Project-Based Section 8 housing is not publicly owned. Let us look carefully what MPHA is really saying on page 17.  MPHA says:

• “HUD Capital Grants Will not Meet their Rehab Needs”
  This is false. HUD increased MPHA’s capital funding by 42% in 2018.
• “Public housing funding method does not produce cash flow to borrow or attract Low Income Housing Tax Credit (LIHTC) investors.”
  All this says is that public housing is not marketable to private developers. Developers will displace thousands of residents once the conversion takes place.
• “Strategy: Convert the public housing platform to a project-based Section 8 platform.”
  It is very clear under their strategy that they want to take public housing and convert it to project-based Section 8 housing where 99.99% will be owned by private developers, who will displace people.
• “Why convert: Section 8 platform provides higher HUD subsidy and a more reliable revenue stream.”
  This is a false statement. There is no evidence from HUD or anyone else that Section 8 funding is more reliable than public housing funding because Section 8 is under the hands of developers and private landlords who only volunteer to rent to Section 8 tenants.
• “Higher revenue stream permits borrowing and attracting LIHTC investment.”
  Again, all this is saying is that they have to convert to Section 8 in order to market to private developers.
• “Why now: In March, 2018, HUD published an updated Demolition/Disposition Notice that provides improved opportunities to convert.”
  Translation: Because Carson and Trump have made it easier for MPHA to do it. But the city and community still must approve these plans.
• “Current funding is favorable for RAD conversions.”
  We already showed in 2015 when residents fought against RAD conversion in Glendale that RAD would displace residents. RAD conversion would give the new owner the mechanism to decide how many units would still be Section 8, which is usually a small number compared to high end market rate apartments. Private owners have the final say. RAD is the tool that will displace these residents.
• “How: Through a conversion process that disposes of the public housing unit to an MPHA controlled non-profit and replaces it with a project-based voucher.”
  This nonprofit will own 0.01% of the building. MPHA will no longer be a public agency. The remaining 99.99% will be privately owned by developers, who will displace residents to make more money. 

MPHA keeps saying that DG&PHC is misinforming people. How are we misleading people when we just share their documents that clearly show they are dismantling public housing and displacing residents by thousands?

On page 18, MPHA says “After any financial transfers of properties, MPHA would continue to manage the properties as “public housing” for its residents” (the quotation marks around “public housing” are from MPHA’s own plan.  These quotation marks are not from DG&PHC). MPHA was forced to put the words “public housing” in quotation marks because they know that a “financial transfer” to private investors would mean that public housing is no longer publicly owned, and therefore is not public housing.  On this page, MPHA also shows a chart of how they would be dismantling public housing.

• MPHA says that they will undergo a “Financial transfers of properties.” This means that they will sell the public housing buildings to private investors.
• This transfer will allow MPHA to sell 99.99% ownership stakes of publicly owned housing to private owners.
• The 0.01% that remains will be “transferred” to a nonprofit that will be controlled by corporate developers (see chart on page 2).
• This means MPHA will cease to exist as a public agency. They will continue to use the “MPHA” name for this new nonprofit, but it will no longer be a public agency and will not be subject to the same levels of public accountability, transparency, and accessibility as MPHA.
• The City of Minneapolis and the US Department of Housing and Urban Development will no longer have any control over MPHA.

On the chart on pg. 18, MPHA has divided the properties into categories “A” through “D” to show their different strategies to privatize. The chart shows that residents at all properties will receive “Tenant Protection Vouchers” (TPVs). TPVs are just Section 8 vouchers.

• Group A are the scattered sites.
  • “Scattered Sites” are single-family homes. They are in almost every ward in the city.
  • MPHA wants to convert these to fourplexes or bigger.
  • They are the only properties that they say won’t receive tax credits, which seems to indicate they want to displace current residents and sell them off through a process called “disposition.”

• Group B is Glendale Townhomes & Elliot Twins.
  • Elliot Twins are two buildings, each with 87 units. They are in Ward 6, Abdi Warsame’s ward.
  • Glendale has 184 units, and is in Ward 2, Cam Gordon’s ward.
  • MPHA wants to use Section 8 to displace residents and sell these properties to investors who will own 99.99% through Low Income Housing Tax Credits.
• Group C are a specific group of midrise buildings
  • 1710 Plymouth is in Ward 5, Jeremiah Ellison’s ward.
  • 809 Spring St & 1900 3rd St are in Ward 3, Steve Fletcher’s ward.
• Group D are all 42 highrises
  • These buildings are spread all across the city.
  • This will displace thousands of residents.

On Page 19, MPHA again uses made up numbers to push their agenda. It is not worth responding to numbers that aren’t real.

Conclusion

This plan is just a nice cover-up for privatization and displacement.  MPHA was embarrassed when residents at Glendale and Elliott Twins exposed in 2017 that MPHA’s displacement plans continues to spread to other highrises,  and MPHA is  actually planning to displace residents as stated from their own documents and annual reports.  As a result, Greg Russ, Executive Director began lobbying the City of Minneapolis to come up with new plans that does not reveal all of the facts of their disastrous plan. Greg Russ began developing a close relationship with Mayor  Jacob Frey to gentrify this city and displace public housing residents under another cover. This is the same plan with a different name Glendale residents rejected in 2015, but now they want to push it to the whole city.  MPHA uses fake numbers, false language, and their well funded PR team to promote their dismantling and displacing  agenda for public housing as a good plan, which will displace thousands  public housing residents in the coming years, and deepen the homelessness and the housing crisis in this city.

On May 24, Jacob Frey used his first “State of the City” address to announce a new program called “Stable Homes Stable Schools.”  A partnership between the City of Minneapolis, Minneapolis Public Housing Authority (MPHA), and Minneapolis Public Schools, the program claims to address the homelessness and displacement crisis currently plaguing Minneapolis broadly, and Minneapolis Public Schools in particular. While announcing the program, Mayor Frey highlighted that 3,500 students (8.5% of MPS’ student body) are currently experiencing homelessness.  While these disturbing numbers do confirm that there is a crisis due to a lack of income-based affordable and public housing in the city, the “Stable Homes Stable Schools” initiative is emblematic of the Mayor’s agenda to accelerate the already rapid gentrification of Minneapolis while offering token gestures for low-income and minority residents designed to deflect criticism rather than offer real solutions.

Let’s look at 3 major failures in the Mayor’s “Stable Homes Stable Schools” initiative:

1.  It will not reach most students in need.

While the Mayor specifically brought up the fact that 3,500 students are currently experiencing homelessness, his speech also stated that the Stable Homes Stable Schools initiative will only reach “up to” 320 families, or 648 students from pre-k to 8th grade. Leaving aside the disturbing “up to” modifier (which implies the number reached could be far lower) and the exclusion of high school students from the program, the maximum number of students reached by this initiative will be less than 19% of the total number of students experiencing homelessness.  This is unacceptable.  We cannot celebrate any program that excludes over 80% of an affected population.

2.  It relies on Housing Choice Vouchers (aka Section 8), which do not work.

Although the Mayor touted that this program goes directly to families and not to developers (in contrast with the vast majority of his “affordable housing” initiatives which take the form of subsidies and handouts for landlords and developers), the form this support will take are housing choice vouchers (aka Section 8 Vouchers), provided by the Minneapolis Public Housing Authority (MPHA). In theory, Housing Choice Vouchers allow holders to find housing wherever they want, paying 30% of their income.  In reality, current voucher holders are unable to find housing because landlords in Minneapolis discriminate and do not rent to Section 8 voucher holders, who are majority low-income, Black or Black Muslim, and Hispanic families.  Making this problem worse, each family who receives a voucher has only 90 days to find housing with the voucher.  If they can’t find housing within that time frame, the voucher  expires, meaning they must forfeit their voucher. There is an overwhelming body of evidence that Section 8 voucher recipients have a very difficult time finding housing using their voucher.  A 2016 article about Section 8 vouchers in California found “failure rates” (meaning the number of voucher recipients who failed to find housing within the designated time period, thus losing their voucher) ranging from 22% to 64%, and many articles and studies around the country mirror these results.

Locally, many families are forced to look to the suburbs to find housing with their vouchers.  But even when these families move to the suburbs, they will be displaced again by new investors who will upscale the buildings, and remove Section 8 tenants and all low-income renters in that building.  This is classic gentrification.  In short, even the minority of homeless families enrolled in Minneapolis Public Schools who are able to participate in this initiative will find it difficult if not impossible to find housing with their voucher. Those that do find housing will likely find it only in far flung suburbs and exurbs, far away from their schools and communities. This disrupts the life of students. A 2001 academic paper found that frequent moves “reduces children’s academic functioning, and may negatively affect other aspects of child well-being.” To relocate MPS students to suburbs cannot be viewed as an acceptable solution to the homelessness crisis.

A final note: the Section 8 non-discrimination ordinances recently passed by the City of Minneapolis have been misunderstood, with many people believing that there is now a mandate that all landlords must accept Section 8 vouchers. But because the Section 8 Housing Choice Voucher (HCV) program is a voluntary federal program, landlords cannot be forced to accept these vouchers. In order to avoid accepting the vouchers from Section 8 families, landlords need only raise rents by 15 or 20 dollars over the Section 8 limit for each family size. Even if their rents do fall under the Section 8 limit, landlords can still reject Section 8 applicants as long as they do not explicitly state they are doing so because of their Section 8 voucher.

3.  The Stable Homes Stable Schools Initiative does nothing to address the structural causes of the homelessness crisis.  

The homelessness crisis did not emerge in a vacuum. Minneapolis has seen an incredible volume of luxury developments over the past few years, a trend that appears poised to continue apace. This rapid gentrification is causing a parallel rent increase, while wages stagnate or decline.  At community meeting hosted by League of Women Voters  on May 15th, 2018 about Minneapolis’ Comprehensive Plan called “Minneapolis 2040”, City staff clearly stated that the Black income dropped by 40% in Minneapolis from 2000 to 2018. Yet Mayor Frey and City Planners who drafted this plan have absolutely no plan to combat this economic and housing crisis facing communities color due to his strong support among real estate developers.  According to MinnPost, during the 2017 election Mayor Frey raised more money from developers than any other candidate, raising more than 4 times as much as the next closest candidate (former Mayor Betsy Hodges).  Mayor Frey cannot risk alienating this core constituency, which is why he has been such a forceful proponent of “Area Median Income” (AMI) housing. This approach, pushed by developers, sees the city offer heavy subsidies to developers who build a small fraction of units at a level deemed affordable to individuals earning a certain percentage of the Area Median Income. These units are deceptively labeled “affordable” even though they are unaffordable for low-income and minority communities.  A recent study by CURA confirmed what many have been saying for years: AMI housing is unaffordable for minority and low-income communities.  By pushing policies like AMI housing and the Stable Homes Stable Schools initiative, Mayor Frey is offering band-aid solutions that do absolutely nothing to address the root problem: gentrification and displacement due to racism, classism, and profit from public land.

Mayor Frey and his developer friends want to accelerate the gentrification of Minneapolis.  It is not surprising then that in the same speech where he highlighted the need to “preserve existing affordable housing” the Mayor announced a new initiative in partnership with MPHA, who is currently undergoing a major effort to privatize the entire public housing stock in Minneapolis. Rather than hold MPHA accountable for their clandestine effort to sell off the largest body of truly affordable – i.e. income based – public housing in Minneapolis, Mayor Frey has identified the agency as an ally in his quest to upzone and gentrify Minneapolis. Aware that they are both losing the battle of public perception, the Mayor and MPHA have joined forces to announce this new initiative in order to distract the public from their disastrous policies and plans. The people of Minneapolis deserve more than lip service.  We demand real affordable income-based and public housing now!

While the Mayor distracts us with his new alliance with both MPHA and developers, he fails to serve the largest and the most vulnerable population, including low wage workers essential to any thriving city. Defend Glendale & Public Housing Coalition proposes instead a city in which low-income residents are able to stay in their chosen community in high quality, stable housing that charges only 30% of the renter’s income, like public housing does, and to build more public housing.

Citations:

To learn more about why AMI housing doesn’t work, see our previous pieces here and here .

To learn more about CURA’s research, and what it means for low-income communities, see our blog post.

Mayor Jacob Frey’s 2018 State of the City Address.

Article on Section 8 vouchers in California.

2001 paper on the impact of frequent moves on academic performance.

CURA study on gentrification.

MinnPost article about campaign contributions.

https://minneapolis2040.com/

Our first video covers Minneapolis Public Housing Authority (MPHA)’s new “Strategic Vision and Capital Plan”, as well as their refusal to hear comments, and Director Gregory Russ’s admission of the privatization of Minneapolis public housing. Please support us by sharing this video and signing our petition.

Please share, tell your friends, and call your local elected officials. Do not stand idly by while our homes are taken away from us!

As rents continue to rise at an alarming rate, affordable housing has become one of the hottest topics of political debate in Minneapolis. It featured prominently in last fall’s local elections, with candidates agreeing that the city is experiencing a housing crisis and that we need to build more affordable units. At Mayor Jacob Frey’s recent Affordable Housing Community Forum on Feb. 15th, 2018, he discussed the need for more “deeply affordable” units in Minneapolis – housing that, as he defined it, is set at 30% of Area Median Income (AMI). “Deeply affordable” certainly sounds nice, but the reality is not so good.

What is AMI?

Area Median Income, or AMI, is the midpoint of all household incomes in a region, meaning half of all households earn more than the median income and the other half earn less. The U.S. Department of Housing and Urban Development (HUD) determines what counts as a “region,” and for the Twin Cities, it includes Minneapolis and St. Paul as well as dozens of white, wealthy suburbs – 13 counties in total. In 2018, the AMI for our metro area was $94,300. This number, which our public officials and institutions want to use to set affordable housing guidelines, groups the poorest residents together with the wealthiest residents, and wealthier white people together with low-income people of color.

When developers, politicians, and non-profits talk about affordable housing, they mean housing that is affordable to households earning a certain percentage of AMI (commonly 60%, 50% or 30%). No matter what AMI is chosen, rent costs 30% of it (adjusted for the unit’s size). The actual low-income of residents is not factored into the rent calculations, as long as they don’t earn more than the chosen AMI level. So for example, 30% of AMI in the Twin Cities is $28,290 per year. People living in 30% AMI housing cannot earn more than that (unless they have 5 or more people in their family). As a result, $28,290 is the income that is used to determine rent levels in these “deeply affordable” units, even if the families actually living in those units earn less than that. (The income that qualifies for simply “affordable” housing is 60% of AMI, which is $56,580.) As mentioned above, the number of bedrooms in a unit will affect the ultimate rent levels as well. The greater the number of bedrooms, the higher the rent. While all this is confusing, the bottom line is that defining affordable housing in this way is problematic.

What’s Wrong with AMI?

There are some major problems with using AMI to determine affordability. The first is that by grouping an entire region’s population together, AMI ignores racial disparities that have resulted from centuries of housing and economic discrimination against minorities and poor people in the United States. Lumping our diverse central cities in with the more affluent, white suburbs produces an especially skewed result given that Minnesota has one of the worst racial disparities in the nation. In fact, while the AMI for a family of four in the majority-white Twin Cities metro area was $94.300 in 2018, the most recent census data lists the median income for black Minnesotan households is just $33,436, or roughly a third of the metro’s AMI. That’s a huge gap! Using AMI as a measurement to determine housing affordability for low-income families obscures the real needs of our city’s most vulnerable populations, and discriminates against people of color and poor people, and that’s by design. AMI-based housing, as opposed to truly income-based public housing, is part of private developers’ agenda to gentrify Minneapolis by making it unaffordable to people of color and poor people, so they can raise rents on everyone. The plan is to slowly eliminate the safety net of income- based housing for low-income families.

The second problem of relying on AMI to set affordable housing rents is that everybody earning less than the targeted percentage of AMI is left behind. According to the narrative pushed by developers, politicians, and the non-profit industrial complex, the most affordable housing we can provide is for households earning $28,290 per year. If that’s the case, then what happens to everybody earning less than that – those most in need? Don’t they deserve affordable housing too? A family taking in only $20,000 per year, for example, could still live in 30% AMI housing, but they’d be paying the same rent as households earning $28,290 per year. By definition, since they’d be spending greater than 30% of their income on rent, that housing would not be affordable to them. Therefore 30% AMI housing or above is only affordable to the narrow slice of the population earning exactly 30% of AMI or above, and no one else. Because of the racial disparities outlined above, the families getting left behind by the AMI-driven affordable housing paradigm are more likely to be poor, low wage workers, low-income people of color, as well as immigrants, refugees, seniors, and the disabled.

A further problem with AMI is that it discriminates against large family sizes. The greater the number of bedrooms, the greater the rent. So if two families have the same income, the larger family will get charged higher rent. The AMI model assumes that families can afford to pay more as their household size increases, but as anyone with kids will tell you, the opposite is true. A single mother, at the same income level, will have to pay higher rent if she has four children than if she has one child, even though the costs of raising four children are greater. This is discriminatory and burdensome on poor families. Public Housing vs “Affordable Housing” Thankfully, a better way to provide affordable housing already exists. Public housing, unlike privatelyowned “affordable housing,” charges residents 30% of their income for rent, no matter what their income is. So it is income based housing. Therefore, public housing always meets the definition of affordable, even if a household earns less than 30% of AMI ($28,290). This is good news for residents, whose incomes fall mostly below the 30% AMI threshold that would qualify them for the mayor’s “deeply affordable housing.” In fact, the average Minneapolis Public Housing Authority (MPHA) working household earns $20,656, and the average low-income MPHA public housing resident earns $14,201. Seniors that are on social security income take in just $9,000 per year, which is only $750 a month. Therefore, 30%, 50%, 60%, or 80% AMI housing would be deeply unaffordable to any of these residents in public housing including all working class renters that don’t live in public housing.

Let’s compare what people’s rents would look like in public housing vs. AMI housing:

It’s clear that public housing is a better option for low-income households.

Public Housing Under Attack

Because public housing is always affordable to low-income residents (due to being income-based rather than AMI-based), Defend Glendale & Public Housing Coalition (DG&PHC) wants to protect it. DG&PHC has been exposing MPHA’s plans to privatize Minneapolis Public Housing for years. MPHA claims that it lacks enough funds to keep public housing as-is, but instead of seeking out additional public funding, it’s selling out its vulnerable residents by pursuing a secretive and destructive privatization plan that would convert public housing to AMI housing. MPHA is now even openly admitting they prefer an AMI model over the truly affordable public housing model. In a past Twitter post celebrating Mayor Frey’s forum, MPHA writes:

“[Mayor Frey] kicks off tonight’s housing forum by saying it’s time to invest in deeply subsidized housing for families with 30 percent of area income. Who does more of that than anyone? Public housing!”

This is a lie. It is irresponsible for MPHA to imply that public housing relies on AMI measurements to determine rent levels when it does not (and cannot). Under federal guidelines, rent for public housing is determined at 30 percent of a household’s monthly income. By using such deceptive language, MPHA is laying the groundwork for its plans to convert public housing to private rental housing – a move which would jeopardize the well-being of its thousands of residents, as well as potential future residents of public housing. MPHA’s public housing waiting list had 12,701 people on it in 2016 and growing, a number which doesn’t even reflect all the people experiencing homelessness who could be provided an affordable home if public housing was expanded.

AMI-based housing is not a solution to the affordable housing crisis; it is an assault on the city’s poor and marginalized. The obvious solution is to have more public housing, not less, but that effort is being undermined by the very people in charge of public housing themselves: MPHA’s current Board of Commissioners and its Executive Director Gregory Russ. DG&PHC calls on the city of Minneapolis to put a stop to MPHA’s destructive plans, and fund public housing so that those most in need of truly affordable housing can actually get it.

References:

http://www.ci.minneapolis.mn.us/mayor/vision/affordable-housing https://www.huduser.gov/portal/datasets/il/il2017/2017summary.odn http://minnesota.cbslocal.com/2017/08/22/minnesota-racial-inequality/ https://www.twincities.com/2017/09/14/minnesotans-incomes-are-up-poverty-is-down-but-successes-remain-uneven/
http://www.danter.com/taxcredit/rents.htm https://metrocouncil.org/Communities/Services/Livable-Communities-Grants/2017-Ownership-and-Rent-AffordabilityLimits.aspx https://www.hud.gov/sites/documents/DOC_11689.PDF https://twitter.com/MPLSPubHousing/status/964287671068778496 http://tinyurl.com/LIHTC-in-MPLS https://www.hud.gov/topics/rental_assistance/phprog

To use AMI (Area Median Income) to calculate the rents for low-income and poor families is unjust and violent. It does not work. It is displacing and evicting low-income families out of Minneapolis that are majority Black, Black Muslims, POC, Immigrants, Refugee, Disabled and Seniors. AMI model to measure rent is housing for the rich and elite of Minneapolis not for poor or working class of Minneapolis. See chart below to explain how AMI works. Continue reading →

Here is a public endorsement by MPHA of Secretary Ben Carson’s plans to increase rents for low income people by 300 percent and to privatize and dismantle public housing. Continue reading →

April 26, 2018 — The six-year record of MPHA’s Moving to Work (MTW) expenditures for capital needs of its properties, compiled by Defend Glendale & Public Housing Coalition, reveals MPHA’s de facto policy of depriving the Glendale Townhomes neighborhood of a fair share of the MTW Capital Improvement funds spent by MPHA in that period.  As the following table documents, over the course of this six-year period (2013-2018), MPHA’s under funding (non-funding, actually) of Glendale’s capital needs totals $2,757,840. In this period, in fact, MPHA has directed no MTW funding whatsoever ($0.00) to address Glendale’s housing capital needs, while directing $91,928,000 for capital projects elsewhere in its system. Continue reading →

Just over a month ago, the 2018 Omnibus Spending Bill passed both the House and Senate, averting a government shutdown and funding the government through September 30th. To the surprise of many, this spending bill included major increases in funding for public housing. The Department of Housing and Urban Development saw a 10% funding increase, including $4.55 billion for the Public Housing Operating Fund (an increase of $150 million), and $2.75 billion for the Public Housing Capital Fund, an increase of over 40%. Continue reading →

On April 18, 2018, the Housing Policy & Development Committee of the Minneapolis City Council approved a pilot initiative that, if it becomes City policy, we believe has the serious potential to contribute to rising rents. Offering large property tax breaks to multi-unit landlords, the scheme uses deceptive Area Median Income (AMI) calculations to hide a pro-gentrification agenda. Continue reading →