In 1850, the Minnesota Territory was organized with a population of 12,000. Ten years later, it became a state with a population of 200,000; thirty years after statehood, Minnesota's population topped one million. The state of Minnesota historically has had an economy based upon manufacturing and natural resources, which continues to influence its current economy. The large population centers include Minneapolis/St. Paul metropolitan area, Duluth, Rochester, St. Cloud and Moorhead, with most of the growth extending down from Moorhead through St. Cloud, the Twin Cities and Rochester. St. Paul is the capital of the Minnesota.
The Minnesota Housing and Community Development Consolidated Plan is an annual document submitted to HUD by three state agencies -- the Minnesota Housing Finance Agency (MHFA), the Minnesota Department of Trade and Economic Development (DTED), and the Minnesota Department of Economic Security (MDES). The Consolidated Plan is a condition of funding for three federal grants: HOME Investment Partnership Program (HOME), Community Development Block Grant (CDBG), and the Emergency Shelter Grant (ESG). These three grants will be used to reinforce and strengthen the housing, community development, and homelessness commitment MHFA, DTED, and MDES has to Minnesota residents and communities. The annual Consolidated Plan covers the program year for each of the grants, which begins October 1 and ends September 30 of the following year.
The three state agencies sponsored six public meetings in six non-entitlement communities, and 25 focus groups. The public meetings were arranged with the assistance of the Minnesota Housing Partnership -- a statewide nonprofit housing advocacy group with regional offices -- resulting in a high number of attendees. At least one notice for each meeting appeared in a regional newspaper. In addition, the Minnesota Housing Partnership sent out flyers advertising each meeting. Focus groups were held with organizations in order to get the opinion of a particular population. Three types of organizations were targeted for participation in focus groups: 1.) traditional housing/community development groups (e.g. Minnesota Association of Realtors, community action agency directors); 2.) organizations who represent people with special needs or other special populations (e.g. Coalition for Battered Women, Council on Black Minnesotans, the Mental Health State Advisory Board); and 3.) groups who do not deal with housing directly, but come into contact with it on a regular basis (e.g. public nurses, police officers). Public meetings and focus groups were held from March 1995 through June 1995. A draft comment period of 30 days was held for the Consolidated Plan.
In 1990, the population of Minnesota was 4,231,352, based on the U.S. Census. The State Demographer estimated that the population increased to 4,515,118 in 1993. There were 1,635,188 households in Minnesota in 1990. The State Demographer expects the number of households to increase to 1,884,930 by 2005. Household size has declined since 1970, from 3.2 persons per household to 2.58 persons in 1990. It is projected that household size will continue to decline through the year 2000, but at a much slower rate.
Since 1980, the median household income has increased 15 percent. The median household income in 1990 was $35,823. The median family income was $43,500 for 1995. Sixteen percent of the state have extremely low incomes (below $13,050) and 43 percent have incomes that exceed 95 percent of the state median family income (over $41,325). Elderly, disabled, African American, and Native American households were disproportionately represented in the extremely low income group when compared to the state as a whole. Furthermore, these groups, along with single persons and Native American households, have a median household income that is less than half of the state's median family income.
One condition that has been recently identified, especially in areas outside metropolitan areas is the lack of affordable housing in small communities experiencing employment growth. However, the jobs have low wages, construction costs are high, and the small communities have very few affordable units. The Governor's Economic Vitality and Housing Initiative, which began in 1994, addresses this problem. Administered by MHFA, DTED plays an important role in this Initiative.
According to the public meetings and focus groups, Minnesotans are most concerned about the lack of affordable units for low income households. Meeting participants also felt that existing units were the best source of affordable units, but many of these units needed some rehabilitation. For persons with special needs, participants also felt there was a need for more units with services attached to the persons.
In 1990, there were 1,635,000 occupied units in the state, which was an increase of 14 percent since 1980. Of the 1,844,000 total units, 1.5 percent were vacant, and less than one-half percent were boarded up.
Most of the units are owner-occupied units. Nearly 72 percent of all units are owner- occupied. One-third of all owners own their unit free and clear. Over half (61 percent) of the multi-family units have been built since 1970.
Very few units with four or more bedrooms are for rent or sale. One and one-half percent of all units with more than four bedrooms are for sale or rent. Nearly four percent of the mid-sized units with two or three bedrooms are vacant. The largest vacancy rate occurs in the smallest units -- efficiencies and one bedroom -- which have a vacancy rate of 9.5 percent.
Very few units are substandard or overcrowded: only 0.2 percent of all units are substandard and 1.5 percent of all units are overcrowded.
A household's income significantly impacts its likelihood to be a homeowner. The higher the income, the greater the likelihood that the household will own the unit in which it lives. The lower the income, the greater the likelihood the household will rent the unit in which it lives. The majority of households who own their units have incomes greater than 95 percent of the state MFI. The majority of renters have incomes less than 50 percent of the state MFI.
There is an inverse relationship between income and cost burden; as household incomes increase, the cost burden decreases. Only 37 percent of household with extremely low incomes have affordable housing; the remaining 63 percent pay more than 30 percent of their gross income on housing costs.
Similarly, those with lower incomes are more likely to live in substandard or overcrowded units. As incomes increase, the likelihood of living in a substandard or overcrowded unit decreases. Both extremely low and low income households have the highest percentage of households who live in overcrowded and substandard units: three percent of the households are overcrowded and one percent of the households live in substandard units.
According to the most recent MDES Quarterly Shelter Survey, the number of sheltered homeless persons has increased 219 percent since 1986 and 44 percent in the past three years. The last survey, in August 1995, documented that there were 4673 homeless persons who were sheltered in the state.
The Wilder Research Center surveyed 4520 sheltered and unsheltered homeless persons in October 1994. The following information comes from that statewide survey.
Though the MDES Quarterly Shelter Survey show that the fastest growing segment of the homeless population is families with children, most of those surveyed in the Wilder survey were men (51 percent). The majority (70 percent) of those surveyed were in the 20-39 age bracket. About 14 percent were military veterans. Seventy-four percent of the homeless adults do not have a job. Three-fourths of all homeless adults have graduated from high school; only five percent have an eighth grade education or less.
Some of the top needs identified by homeless adults include employment, money, education, transportation, clothing, medical/dental care, food, mental health care, interpersonal needs, and child care. The most frequently identified reason for leaving their last regular housing for women was that they were fleeing abuse; the most frequently identified reason for men was that a relationship had ended. The top barriers to obtaining regular housing were: financial problems, no job, and shortage of affordable housing. Eighty-four percent of the homeless men indicated that they need only an efficiency or one bedroom apartment. Sixty-eight percent of the women require unit with two or more bedrooms because they have children.
According to an assessment by the Department of Human Services, who provides both services and housing for those with special needs, the following are some of the housing and service needs of those with special needs.
Elderly. More supportive housing units where their service needs can more easily be met.
Frail Elderly. The services needed by residents of supportive housing can be divided into three categories: 1.) in-home services, e.g., home nursing, personal care; 2.) services related to the maintenance of the unit, e.g., housekeeping; and 3.) services that are provided to groups in a congregate setting, e.g., van transportation, meals.
Persons with Mental Disabilities. Community support programs include outreach, housing support, day treatment, crisis assistance, employment services, medication monitoring, benefits assistance, psychosocial rehabilitation, and development of independent living skills. This entire range of services, designed to help clients live and function effectively in the community, is available to the residents of each county.
Persons with Physical Disabilities. In general the priority housing need of persons with physical disabilities is affordability and accessibility.
Persons with Alcohol or Other Drug Addiction. Chronic alcoholics need basic supervision, medication and hygiene reminders, guidance in socialization skills and access to assistance for health and social services, financial assistance and chemical dependency treatment services as appropriate.
Local construction standards and zoning requirements were consistently identified as barriers to affordable housing by public meeting and focus group participants. Some community requirements for construction go beyond the minimum standard of quality, thereby increasing the cost of construction.
Minnesota's rental property taxes were consistently cited as a major disincentive to for- profit rental housing developers. Private owners seek profit when investing in rental property; the rental tax system completely undermines the profit-motive, leaving the nonprofit and public sectors to develop rental properties.
According to meeting participants, in order to produce affordable housing, developers often combine various housing resources, or leverage. With each additional source of funding, more strings are attached to the project. Income and construction requirements were often cited as difficult to reconcile when dealing with different funding sources.
Lastly, community attitudes were frequently cited as an obstacle in producing affordable housing. Communities and neighborhoods are very comfortable with homogeneity and are threatened by anything different. NIMBY-ism (not in my backyard) and NIMTO-ism (not in my term of office) frequently thwart affordable housing efforts. Communities lack civic leaders willing to combat the status quo.
An Analysis of Impediments to Fair Housing will be completed by February 1996 at the request of HUD.
Of the units built before 1980 -- when lead-based paint was still in use -- approximately 237,086 rental units are occupied by extremely low or low income households; it is estimated that approximately 202,524 of these units have lead-based paint. Of the owned units built before 1980, approximately 471,922 are owned by extremely low or low income families. Of these units, approximately 313,397 units have lead paint. MHFA works in cooperation with the Minnesota Department of Health, the Minnesota Pollution Control Agency and the cities of Minneapolis, St. Paul and Duluth to administer the HUD grant for Lead-Based Paint Abatement in Low and Moderate Income Private Housing.
DTED surveyed potential CDBG program recipients and administering agencies in August 1995. The highest priority among respondents was new housing construction -- particularly single family construction. The second highest priority was industrial/commercial development; the third priority was infrastructure development -- primarily water, waste water and street construction. Housing and commercial building rehabilitation came in fourth and fifth place, respectively.
DTED also collected information from other state agencies. The Minnesota Department of Health estimates that the state has drinking water needs in excess of $1.15 billion. Similarly, data from the Minnesota Pollution Control Agency estimate the waste water treatment system needs of 296 local jurisdictions amount to more than $3.654 billion.
The state of Minnesota is committed to addressing Minnesota's housing and community development needs by providing financial and related customer assistance so that all Minnesotans have decent, safe, affordable housing and stronger communities.
The three state agencies that administer ESG, HOME, and CDBG will model programs that can be responsive to locally identified community development and housing needs. The agencies also hope to respond to needs that cannot be served in the existing system. All programs are administered on a competitive basis.
Affordable Housing priorities are arranged under the two broad policy goals of MHFA: 1.) meeting Minnesota's basic housing needs; and 2.) strengthen communities.
Meeting Minnesota's Basic Housing Needs. Serving extremely low and low income renters through lowering their cost burden, providing units that are affordable to this population, and improving the condition of these rental units. Rehabilitation of owner-occupied units that house extremely low and low income households. Serving the Homeless. Providing housing units for those with special needs. Helping meet housing and service needs for those with special needs.
Strengthening Minnesota Communities. Strengthening a communities housing stock by providing home improvement and rehabilitation funds for homeowners and communities. Assisting in homeownership opportunities. Assisting in building housing capacity. Preserving existing affordable rental units that MHFA has financed in the past.
MDES continues to organize the process of developing a regional continuum of care system and setting regional priorities. Twenty-five community action agencies compiled continuum of care reports, which assessed the nature and extent of homelessness in their region, and identified services and resources available to serve the homeless and near homeless. The regional Housing Partnership compiled the initial reports and prepared regional plans addressing the needs and gaps in a continuum of care system for each of the regions. The plans cover all of the counties in the state. Each region identified priorities. Below are the top priority of each region.
Southeastern Minnesota: Preventing homelessness among all at-risk groups.
Northeastern Minnesota: Outreach activities, to address the invisibility of rural homelessness and to help people locate and access the services needed.
West Central Minnesota: Providing continuum of care services for each homeless sub- population in the following order: families with children; domestic abuse victims; youth not in families; persons with mental illness; people with substance abuse problems; single adults; and veterans.
Southwest Minnesota: Transitional housing for youth, since this service is non-existent in the region.
Northwest Minnesota: Permanent or supportive housing for families.
Central Minnesota: Permanent or supportive housing for families with children.
Housing. The need for new housing was both the highest priority of attendees at the public meetings and focus groups and among the respondents to DTED's needs survey. However, CDBG funds are not the best vehicle to meet these needs. DTED intends to meet with HUD staff and local housing providers to develop strategies for the use of CDBG funds on new housing needs in areas where housing shortages exist, but still comply with CDBG statutory and regulatory requirements.
Economic Development. DTED's survey indicated that industrial/commercial development was a very high priority among respondents. By state rule, DTED reserves 15 percent of the state's CDBG allocation for business assistance projects.
Infrastructure. Survey respondents and public meeting participants indicated that infrastructure was a high priority. Moreover, housing and community/industrial development cannot occur without adequate infrastructure. DTED will continue to use CDBG funds to finance critical infrastructure projects.
Commercial Rehabilitation. CDBG funds represent the only source of assistance for commercial rehabilitation projects. While it was identified as a relatively low priority, it was nevertheless identified as a priority. DTED awards little of its CDBG allocation to commercial rehabilitation projects: 4.8 percent in FY 1994.
Other Uses. In the past, DTED has awarded small amounts -- less than one percent -- of its CDBG allocation for acquisition/demolition/clearance activities, but only when it supports a high priority housing, infrastructure, industrial or commercial development project. DTED will continue to use CDBG fund for this activity.
Due to the threat of federal cutbacks in resources dedicated to addressing persons in poverty, the state of Minnesota hopes to maintain the current level of services, and coordinate when possible to ensure the efficient and effective delivery of these services.
There are numerous federal, state and local resources that are available to address the housing and community development needs of the state. The state plans to further solidify coordination between these resources.
MHFA, DTED, and MDES coordinated the development of the Consolidated Plan and the public participation process. The state will continue the coordination of their resources in order to implement the Consolidated Plan.
MHFA will address homeownership, rental and unit rehabilitation needs through its programs. DTED will address housing, economic development, infrastructure, and community rehabilitation needs through its programs. MDES will address the three ESG- eligible components of a continuum of care plan: prevention, shelter, and transitional housing. The three agencies will coordinate programs where appropriate.
CDBG and HOME funds will be distributed to non-entitlement areas. ESG funds are currently spent in the entire state.
MHFA will administer HOME; DTED will administer CDBG; and MDES will administer ESG.
Through all MHFA programs, the Agency anticipates that it will assist 40,174 households in obtaining or maintaining affordable housing.