An update on Affordable Housing

Affordable housing remains a huge issue. In Rochester some good things are happening but some are not. I engaged in a healthy discussion with friends who disagreed with my opinion that a new “luxury” apartment building downtown was a good thing. There are some hard truths to the housing industry. It is OK to disagree, but if that disagreement goes so far as to stymie projects that would be good, then we have gone too far. If perfection is the enemy of progress, the status quo will always win. Here are some things to just think about.

Here are some random thoughts that I would like to share.

Here are the numbers in Olmsted County

  • Less than 50% AMI; Income > $35k (14,800 or 25% of Households)
  • 50% to 85% AMI; $35k < Income < $60k (7,000 or 11% of Households)
  • Greater than 85% AMI; Income < $60k (67,500 or 64% of Households)
  • The 2nd group is where the city has the tools to help. The first group is important, but we lack realistic tools.

The role of the City

Everybody hates to hear “that is not our role,” but it has become clear that the city has roles in affordable housing, but not all roles. There are very important items that do need to be done by the HRA / County, State, and Federal Governments as well as the private sector. Here is what the city is currently doing:

  • Incentive & Restricted Density (used frequently)
  • Tax Increment Financing (almost always available for a percentage of 50% & 60% AMI Units)
  • Community Development Block Grants (nearly 100% goes to affordable housing)
  • Issue conduit debt ( almost always available for a percentage of 50% & 60% AMI Units)
  • Preserve existing quality, sufficiently dense affordable housing (working on “4D tax” incentives)
  • Substantially increase ALL housing units (6000 created since 2014)
  • Improve processes (separated from Olmsted County and creating integrated process and department)

Comprehensive Plan & R2X

The new comprehensive plan, Transit Oriented Development (TOD), and Flexible Low Density Zoning (R2X) are huge wins for affordable housing and are not perfect. We need to probably map this to more areas, strengthen policies within the comprehensive plan, get some better architectural standards for R2X. These zoning districts will allow for a number on new “missing middle” housing. The complaints about how the Historic Southwest was handled are fair, and should be addressed in the next round.

“Luxury Apartments”

Don’t believe the hype. Pretty much every new apartment calls themselves “luxury.” That term doesn’t mean anything. I have actually seen luxury apartments in other communities and the only ones I would suggest are luxury is The Berkman and The Maven. There are 2 things that drive up rents. A lack of affordable units and a lack of total units. Every new apartment helps the later. Further if they are built at sustainable densities and locations, they don’t take resources away from the community. New units are ALWAYS more expensive just like new cars. Because we went many years not creating enough units those that would become more affordable have not. Build enough new units and the older ones will be more affordable.

Full disclosure: I voted against subsidies for the Maven, but those subsidies passed 6-1. I voted for subsides for The Berkman which does not contain a percentage of affordable units, the subsidy supports land given to the city for a winder 2nd street and enhanced transitions for the neighborhood as well as a higher level of construction (not stick built).

New Single Family Detached Homes are not Affordable

There was a time that a new single family detached home could be build to be affordable. Those days have long since passed. As a community leader I feel an obligation to ensure that the people live here have a safe, healthy, and accessible place to live. While there are more things that many people would like, they are not needs. The only way to make new single family detached homes affordable (sub $200k) is massive upfront and ongoing public subsidies. This is not sustainable. I have great hope for multifamily ownership properties, but they simply are not being built yet in Rochester.

Transit matters and is getting better

This is a role the city plays. We are doing a pretty good job of sticking to this 5 year transit plan update. After housing, transportation is the 2nd biggest cost for most households. By allowing car free or reduced car households we can improve the overall financial picture for households. Rochester is difficult to live in car free, but getting better. With the addition of mass transit as early as 2024 a large number of neighborhood is, around, and connected to downtown will have this as a reasonable option.

Consider the total costs

Lets compare an “expensive downtown luxury apartment” to buying a $200k home with 10% down. And, yes these are hypothetical. I do wish we have more condo options in that range so that the apartment benefits could extend to ownership properties.

Apartment cost: $1600 monthly

  • Rent $1300 monthly
  • Property taxes: included
  • Insurance (renters) $50
  • Utilities: most probably included but $50
  • Transportation: $200 even if driving there will be far far less.
  • Maintenance: included

Housing cost: $2100 monthly

  • Mortgage $900 monthly
  • Property taxes $200 monthly
  • Insurance $100 monthly
  • Utilities $200 monthly
  • Transportation $500 monthly per car
  • Maintenance $200 monthly

What about families with children?

A big issues with many challenges… It would be great to cycle existing housing to get them into it, but seniors have nowhere else to downsize and go right now. HOWEVER I do like to point out that the number of households with children is at or near the lowest percentage it has been in American history. My hope is that some of these other options free up existing homes. Some seniors certainly can’t afford a new downtown apartment, but many can and this is a popular option.


  1. Let’s build a section of town with tiny homes with a small yard. Not everyone wants a huge house.

    1. Some of the changes we made in zoning better allow for this. Having visited cities all over the work. A safe and affordable living space with easy access to a great park is the best of both worlds!

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