Is the Private Sector unable to provide Affordable Housing?

by Bill McGaughey, Charlie Disney, and Eve White

Archbishop Harry Flynn is right to stress the moral and social importance of affordable housing for Twin Cities residents and to say that the time for action has come. He is wrong to state flatly: “Private sector efforts are not sufficient.”

In our opinion, private-sector efforts would be sufficient if city governments nurtured rather than abused this industry. Scapegoated unmercifully, private-sector landlords are an easy target for various punitive actions which result in destruction of rental housing in the Twin Cities.

How so? Let us cite three problem areas.

First, Minneapolis city government has treated private rental housing as a “cash cow” to be milked for taxes and fees. To pay for ill-considered investments downtown, real-estate tax assessments have been raised on rental housing by amounts ranging from 20% to 50% in a single year. The rental-license fee was raised by 33% last year.

Second, CCP/SAFE, inspections, and other city functionaries punish private-sector landlords for “permitting” crime to take place in or near their buildings. City police, who fail to respond adequately to citizen reports of criminal activity, blame buildings for crime. They scapegoat landlords who do report crime in their buildings complaining of “excessive use” of police resources.

Third - and most important - city and state government use a variety of ordinances and laws to confiscate properties from private owners or run them out of business. Some of these are: the Chapter 249 list, rental-license ordinance, state nuisance law, tenant remedies act (Section 504), eminent domain, and politically targeted inspections. These devices are too numerous and varied to describe here.

So aggressive has city government been in exercising these various options that the rental-housing stock in Minneapolis has declined by 15,000 units during the last ten years - from 90,000 to 75,000. This is a fundamental fact driving the affordable-housing crisis. It makes little sense to go to the state for funds to build expensive new housing when the carnage of old, less expensive housing continues.

Normally, when an industry is in trouble, the makers of public policy seek input from representatives of the affected industry. But we, the small private-sector landlords, are pariahs in this political community. We have been excluded from the housing discussions.

The affordable-housing crisis requires solutions reached after studying the problem in some detail. It cannot be adequately understood by flying over the terrain in a moral stratocruiser at 40,000 feet and forming singular, general impressions.

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