Housing barriers have impacted Minnesota cities of all sizes for the past decade. Cities are facing housing shortages across the continuum — from multi-family, single-family, supportive housing to workforce housing — and residents and businesses are suffering as a result.
“Part of this stems from the recession following the foreclosure crisis in the late 2000s when housing production came to almost a standstill in parts of the state,” Greater Minnesota Housing Fund (GMHF) CEO Andrea Brennan explained. “During that period of time, we really fell behind in housing production, and we’ve been trying to play catch-up ever since.”
No Minnesota city is immune to housing challenges, but Greater Minnesota often faces stronger headwinds when trying to preserve or produce more housing in rural communities. Brennan shared that while the cost to develop housing remains the same throughout the state, rents and housing values in Greater Minnesota communities — particularly more rural, tribal, and smaller communities — are lower than their metropolitan area counterparts.
“The economics of housing production and preservation in Greater Minnesota just don’t work quite as well,” Brennan said.
But despite these obstacles, Brennan considers now to be a time of great opportunity for Greater Minnesota housing.
GMHF Addresses Affordable Housing with Blandin Foundation Support
Brennan’s optimism stems from the 2023 state legislature’s passage of a historic $1 billion omnibus housing finance bill and additional funding for Greater Minnesota housing, which will allow for the emergence of more projects such as GMHF’s comprehensive rural housing project in the Grand Rapids and Leech Lake areas. The project will build or preserve more than 400 units and address the entire housing system, from updating all types of housing stock to boosting community understanding of the need and benefits of a healthy housing sector that serves all residents.
The Blandin Foundation awarded GMHF a $1 million, three-year grant to launch the project and partner with local leaders to address their communities’ affordable housing needs. The grant will support GMHF’s hiring of a staff person who will provide more capacity for fostering local partnerships, submitting applications, and helping the impacted communities take full advantage of the resources provided by recent housing legislation.
Leaning on Local Leaders
Although GMHF will provide support where needed, Brennan emphasized that local leaders are the real experts on their communities’ housing needs.
“We’re not coming in with any prescribed, ‘this is what you need to do,’” Brennan said. “It’s very much—and it should be—driven by locally-identified needs and locally-identified solutions. Local communities know what their needs are, and they know what the solutions are. What they lack is an ability to control these external market forces like interest rates, inflation, labor shortages, and all of that.”
In a press release, the Blandin Foundation shared a 2022 Cass County housing study found that 600 housing units of all types — multi-family and single-family, rentals and owned — are needed now. An additional 2,000 units likely will be needed in the future across the region. At the time of the study, the Leech Lake Band of Ojibwe’s Housing Authority reported a waiting list of 400-plus households and estimates total need is now double that figure.
“They’re well aware of their housing needs. They’ve done the studies, but they also feel it every day,” Brennan said. “They hear it from residents; they hear it from employers.”
An inadequate housing supply limits local businesses’ ability to recruit, hire, and retain workers who want to live nearby or ensure a reasonable commute to work. Childcare providers can’t offer viable, at-home services if they can’t find housing for themselves and their families.
“This affects everybody in communities, and it affects the overall health of a community if there’s not an adequate housing supply,” Brennan said.
Opportunities to Start Small
City leaders know their cities can’t flourish without adequate housing, but addressing the decades-long housing shortage can be intimidating. How can cities even begin to tackle a complex matter with limitless barriers? Brennan suggests starting small and being proactive.
Brennan shared that, for example, if a city is getting $80,000-120,000 in local housing aid, they can use that funding to build one home, start a local housing trust fund, or partner with a local employer to identify some housing solutions.
“Communities don’t have to be overwhelmed and think, ‘Oh, I have to build a 75-unit, affordable, senior housing development.’ No. These investments can be scaled to a community’s particular need and ability.”
The 2023 $1 billion housing bill includes $5 million in funding for the Greater Minnesota Housing Infrastructure Grant Program, a new program designed to assist cities in Greater Minnesota with the cost of infrastructure needed to support adding housing units. This is just one of the 15 new housing programs created and funded during the 2023 legislative session.
“There are opportunities for local communities to start really small and build off work that’s been done before because there’s a lot of great and innovative work that’s happening throughout Minnesota,” Brennan said. “I look forward to seeing what can happen in Minnesota communities.”