Housing

In May 2012, the Southwest LRT Community Works Steering Committee endorsed the creation of a housing strategy for the Southwest Corridor and directed the program’s Housing Workgroup to carry out the development process. The purpose of this strategy is to help fulfill the Southwest Community Work’s vision, goals and investment guiding principles to position corridor communities as places for all to live, providing a full range of housing choices, especially within a half-mile of the METRO Green Line Extension.

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Housing inventory executive summary

Southwest LRT Community Works recently completed a Corridor-wide housing inventory, which provided a wealth of housing and demographic data for the areas surrounding the 17 proposed transit stations along the Southwest light rail transit corridor (SWLRT). Housing inventory research was completed corridor-wide and at the half-mile, one-mile, and two-mile radii from each station.

The outcome of the analysis provided Hennepin County and the Southwest LRT Community Works partner cities of Minneapolis, St. Louis Park, Hopkins, Minnetonka, Edina, and Eden Prairie with baseline housing, demographic, and economic profiles that will assist in enhancing local and regional housing goals and policies as identified by the Corridors of Opportunity (CoO). The Southwest Corridor-wide housing inventory represented the starting point for the broader Southwest Corridor housing strategy, and the housing inventory was also used to provide input to the Southwest Transitional Station Area Action Plan (TSAAP) process. Future phases of the housing strategy will build upon the housing inventory and provide detailed recommendations related to housing strategy and goals. The next phase of the housing strategy, which began in February 2014, is the gaps analysis.

Purpose of study

Maxfield Research Inc. was engaged by Hennepin County (on behalf of the Southwest LRT Community Works) to provide a housing inventory for the areas surrounding the 17 proposed transit stations along the SWLRT. The corridor extends from Downtown Minneapolis through St. Louis Park, Hopkins, Minnetonka, and Eden Prairie. Housing inventory research was completed corridor-wide and at the half-mile, one-mile, and two-mile radii from each station.

The outcome of the analysis is intended to provide Hennepin County and the Southwest LRT Community Works Project with a baseline housing inventory and demographic/economic profile that will enhance local and regional housing goals and policies as identified in the CoO. The Southwest Corridor-wide housing inventory will establish the starting point for the broader Southwest Corridor housing strategy, while simultaneously providing input to the Southwest TSAAP. Future housing strategy tasks include market feasibility and accessibility, gap analysis, and strategy/goals that will be completed at later dates. Future phases will build upon the housing inventory and provide detailed recommendations related to housing strategy and goals.

Demographics

Extensive demographic research was completed to obtain a full scope of factors that affect each station’s demographic and economic compositions. Demographic analysis was compiled corridor-wide and at the half-mile, one-mile, and two-mile radii of each station area. Demographic highlights include:

  • The overall transit corridor (half-mile) experienced growth in population and households of +15% and +16% respectively between 2000 and 2010. Growth is projected to continue through 2017 but at a much lesser rate of +3% for both population and households. This growth rate will likely increase as transit-oriented development will likely increase closer to the arrival of the SWLRT.
  • In 2010, the Blake Road Station had the highest population with nearly 5,400 persons (half-mile). However the West Lake Station posted the highest number of households (2,685).
  • The half-mile corridor population was younger as the largest age cohort for nearly all station areas was ages 25 to 34 years old in 2010. Over 50% of the corridor’s population was 35 and under.
  • The average corridor-wide household size was only 1.83 persons per household at the half-mile corridor. Only four stations (Penn, 21st Street, Louisiana, and Blake) averaged over 2.0 people per household, indicating that there was a high percentage of single and two-person households.
  • The majority of households (54%) within a half-mile SWLRT Corridor rented their housing in 2010. The percentage of renters is projected to increase for nearly all of the stations through 2017. This trend started after the housing bust and Great Recession out of necessity for some householders, but has also become a lifestyle choice.
  • Minorities accounted for about 27% of the half-mile corridor population in 2010. This compares to about 26% of the Hennepin County population and 21% of the metro area population. The largest concentration of the non-white population was within Royalston and Van White Station areas in Minneapolis.
  • In 2012, the median half-mile corridor household income was $50,580. Median incomes ranged from $31,475 (Hopkins Station) to $131,200 (21st Street Station). By 2017, the median household incomes are projected to increase at all stations by an average of about 16% (3.2% annually). Seven of the stations are projected to have income growth from 20% to 30%.

Employment

Employment growth can fuel household and population growth as people generally desire to live near where they work. Employment data and mobility trends were compiled both corridor-wide and for each individual station area. Key employment findings include:

  • SWLRT Corridor communities are home to numerous employment centers as there are approximately 107,200 jobs at the half-mile corridor as of 2010. This accounted for 13% of all Hennepin County jobs and 7% of the metro area jobs.
  • The Royalston Station had the greatest number of jobs (10,208) within the half-mile corridor due to its proximity to Downtown Minneapolis. The Louisiana Station (8,469 jobs) and the City West Station (7,629 jobs) were the next two station areas with high concentrations of jobs. The 21st Street and Penn Stations had the fewest number of jobs within half-mile with 167 and 457 jobs, respectively.
  • A higher percentage of workers within half-mile of the SWLRT line compared to the metro area had a bachelor’s degree or advanced degree (31% compared to 28%). Higher educational attainment also correlated to higher earnings. Approximately 52% of workers earned more than $3,333 per month within half-mile of the SWLRT line compared to 47% in the metro area. The Opus Station had the highest earners with 78% of jobs earning more than $3,333 per month.
  • Most station area residents commute outside of the community they live in. For example, 44% of residents living within half-mile of stations in Minneapolis also worked in Minneapolis; while only 7.1% of residents living within half-mile of stations in Hopkins also worked in Hopkins. Corridor-wide, approximately 31% of all residents within half-mile of the SWLRT work in Minneapolis followed by 7.6% in St. Louis Park.

Education

Key data points were obtained for all public, private, charter, and post-secondary schools located within the SWLRT Corridor. The following bullet points summarize education findings:

  • There are six public school districts that fall along the SWLRT line: Eden Prairie, Edina, Hopkins, Minneapolis, Minnetonka (not in two-mile radius of SWLRT line), and St. Louis Park. There were 38 public schools located at the two-mile corridor of the SWLRT  line with a total of 30,014 students as of the 2011-2012 school year.
  • The Minneapolis Public School District had the largest enrollment with 31,750 students while the St. Louis Park Public School District had the smallest enrollment with 4,350 students. The Minneapolis Public School District also had the highest percentage of minority students (65%) and free/reduced lunches (64%), but the lowest graduation rate (47%). Conversely, the Minnetonka Public School District had the lowest percentage of minority students (11%) but the highest graduation rate (95%). The percentage of open enrolled students varies between 9% (Edina) and 15% (Minneapolis).
  • In addition to the 38 public schools that fall within two-miles of the SWLRT, there are 28 private schools, 22 charter schools, and four post-secondary schools.
  • Students and families who attend to schools within half-mile of the SWLRT will have the greatest opportunity to utilize the SWLRT for their transportation needs. There are four public schools, seven charter schools, and ten private schools located within half-mile of the SWLRT.

Housing characteristics

The SWLRT Corridor housing stock was analyzed by corridor, community and station area level, including data on the age of the housing stock, housing structure types, mortgage status, building and demolition permit trends, and relocation trends. Housing characteristics highlights are as follows:

  • Emulating the housing market over the past decade, building permit activity in SWLRT Corridor communities was strong between 2000 and 2006 before significantly falling in after the housing bubble burst. About 80% of all new housing units built last decade were constructed between 2000 and 2006.
  • Minneapolis accounted for 70% of the new housing units over the past decade among corridor communities. However, most of these units were condominiums constructed between 2005 and 2007.
  • Since 2005 there has also been the demolition of 270 single-family units within the two-mile SWLRT Corridor. Two-thirds of the tear downs have been in the Edina portion of the corridor.
  • With the exception of the Royalston Station, the age of the housing stock is newer the further southwest from Downtown Minneapolis. About 36% of homes within half-mile of stations in Minneapolis were built before 1940. In comparison, 8.9% of homes within half-mile of stations were built before 1940 in St. Louis Park, 11.3% in Hopkins, 1.8% in Minnetonka, and 0.2% in Eden Prairie.
  • Housing type also varies considerably between station areas as the Penn and 21st Street Stations in Minneapolis are dominated by single-family detached homes within the half-mile radius (over 80% of stock); whereas there are no single-family homes near the Town Center and Southwest Stations in Eden Prairie.
  • Corridor-wide, about 25% of all housing units within the half-mile corridor are single-family units. Over 50% of all housing units in the SWLRT Corridor are located in multifamily structures with over 20 units.
  • Most households residing in the SWLRT Corridor tend to stay in the same community or adjacent community when they move. According to the relocation data, about two-thirds of existing householders stay within a SWLRT community when they move.

For-sale real estate market

The for-sale housing market includes an evaluation of home sales by all SWLRT Corridor cities and within the station areas, an overview of homes for sale within the station areas, and a review of lender-mediated properties. For-sale highlights include:

  • Real estate activity among communities and station areas along the SWLRT Corridor mirrored the metro area and national real estate market with strong real estate appreciation between 2000 and 2006 (+59%) before experiencing falling home prices once the housing market bubble burst. However, declining home prices (-17%) between 2005 and 2012 along the SWLRT were not as severe as most communities in the metro area.
  • Lender-mediated property sales (e.g., foreclosures and short sales) were lower among SWLRT communities compared to the metro area (38% among SWLRT communities vs. 50% metro area).
  • Housing resale prices vary significantly across the SWLRT Corridor. Through third quarter 2012, median resale prices within the half-mile corridor were highest at 21st and Penn Stations ($380,000+) and lowest at the Opus, Southwest, and Mitchell Road Stations (under $100,000).
  • As of the fourth quarter of 2012, the median list price for a home within the half-mile SWLRT Corridor was $348,800 compared to approximately $200,000 in the metro area. The high corridor median list price was inflated based on the price points of homes near the 21st Street and Penn Stations in Minneapolis.

Housing inventory

The housing inventory analyzed a variety of metrics such as affordability, inventory of rental housing units and condominium units, homestead vs. non-homesteaded properties, naturally occurring affordable housing, and identified housing projects in the development pipeline (e.g., under construction, planned, pending, etc.).

Maxfield Research Inc. identified and surveyed rental properties of 12 or more units along the corridor for both general occupancy and senior (age-restricted) housing. Properties were inventoried within a two-mile radius for the suburban stations and a one-mile radius for the Minneapolis stations.

  • Corridor-wide, 401 projects were inventoried that encompassed over 29,300 units. Market rate projects (those with no income restrictions) accounted for 80% of the total units. Affordable/subsidized projects represented about 12% of the units, and age-restricted senior projects accounted for 8%.
Bar chart of corridor-wide rental units by housing type
  • About 44% of the total rental units (12,764 units) inventoried are located in Minneapolis. However, over 4,500 of these units are located closer to existing LRT lines. St. Louis Park had the highest rental inventory among the suburban SWLRT communities (5,853 units).‚Äč
Bar chart of rental units by city within SWLRT corridor.
  • Only 12% of the units (almost 3,000 units) are located within one-quarter mile of station areas. Furthermore, only five of the 17 stations have rental units within a quarter-mile of the station. Just over one-half (51%) of the units are located within one-half to one-mile of station areas.

Bar chart of corridor-wide rental units by distance to SWLRT station.

Bar chart of rental units by proximity to station.

  • Housing units that do not have income guidelines yet are more affordable than other units in a community are considered “naturally occurring” or “unsubsidized affordable” units. Typically these units have lower values based on a combination of factors such as age of structure/housing stock, location, condition, size, functionally obsolete, school district, etc. A review of market rate rental projects found that 53% of the total units were constructed at least 30 years ago, indicating the rents were more affordable than newer product. Finally, about two-thirds of market rate projects with available rents were considered affordable to households at 50% to 60% of AMI (households earning between $29,300 and $50,340 for a one- or two-bedroom unit).
  • Corridor-wide in 2012, non-homesteaded properties accounted for 21.5% of all non-apartment residential units. Minneapolis accounted for 69% of the over 11,000 non-homesteaded properties and about one-half of the non-homesteaded units in Minneapolis were condominiums. Corridor-wide, 11% of single family homes were non-homesteaded.
  • As of late 2012, there were 9,700 housing units either under construction, planned, or pending along the SWLRT Corridor. However, the number of units declined to 4,200 after excluding projects closer to other LRT stations. About 70% of the planned product is general-occupancy market rate rental housing; most of which is higher-end renting at over $1.75 per square foot). Although 80% of the units in the development pipeline are located in Minneapolis, there are several projects under construction or planned in the suburban communities.

Housing programs

There are a variety of tools and strategies the communities along the Southwest Corridor provide that are designed to improve and enhance housing choices and services. Many cities strive to provide programs supporting a wide variety of housing choices across all incomes, housing types, sizes, and price points. Examples of housing programs include first-time homebuyer programs, fix-up funds, rental ordinances, foreclosure prevention, etc. As part of the housing inventory, housing programs were summarized for all SWLRT communities and for Hennepin County. Key housing program findings are as follows:

  • The number and type of programs vary significantly from city to city along the SWLRT Corridor. While the cities of St. Louis Park and Minneapolis offer numerous housing programs (17+); Golden Valley and Edina offer very few.
  • There are no housing programs that are offered in all seven communities. However, there are four programs that are offered by five of the seven communities, as identified below:
    • Housing Fair
    • Deferred Loan Program
    • First-Time Home Buyer Program
    • Land Trust
  • In addition to the housing programs currently offered by communities, there are a number of programs referred to or administered by third parties. Examples include the Community Action Partnership for Suburban Hennepin County, Minnesota Homeownership Center, Center for Energy and the Environment, CenterPoint Energy, and Xcel Energy, among others.
  • Additional housing programs implemented by other cities were also identified. Examples included inclusionary zoning, density bonuses, and rent-to-own programs, among others.
  • Finally, the study provided examples of collaboration programs that could be implemented while addressing common goals and housing issues along the SWLRT Corridor.

City policies

Accompanying the data review was the review of plans and policies adopted by the seven jurisdictions (Minneapolis, Golden Valley, St. Louis Park, Hopkins, Edina, Minnetonka and Eden Prairie) that are anticipated to be influenced by the SWLRT line. The following bullet points summarize key city policy findings:

  • Corridor cities have adopted polices and land uses which incorporate the future SWLRT, even though it was uncertain if the corridor would be constructed.
  • Polices and land use plans identified and incorporated language that supports higher densities along the corridor, utilizing mixed-use developments, promote alternative housing other than single-family, and provide opportunities for affordable housing for their elderly and transient workforce.  
  • Some cities have potentially competing interests in their development policies. For example, new development could encroach upon areas the city may be striving to preserve.
  • Most of the plans and policies were prepared in the early to mid-2000s as cities were updating their comprehensive plans. As a result, most of the data is sourced to the 2000 census and is outdated. However, the policies established within the updated comprehensive plans do not reflect a specific timeframe but establishes future guidance for each city.

Financing tools

The financing tools analysis summarized the current tools, resources, and funding sources which could be used to create affordable housing along the SWLRT Corridor. The following three bullet points are recommended to help mitigate impediments to development along the SWLRT line:

  • Address the expensive and cumbersome land acquisition process
  • Form a consensus over what TOD in Minnesota should be
  • Modify the statutory requirements for establishing TIF (tax increment financing) districts.

Housing gaps analysis executive summary

This section describes, in brief, key findings and recommendations derived from the Housing Gaps Analysis. The information presented in this section are meant as a summary of, not a substitute for the body of the report, which contains additional information and detail critical to a full understanding of the analysis, the recommendations provided, and the context within which they were formulated.

Background & Context

Marquette Advisors was retained to provide a Housing Gaps Analysis related to the SWLRT Corridor. The "Corridor" as defined for purposes of this analysis comprises a ½ mile radius surrounding each of the planned LRT stations. The Housing Gaps Analysis is a critical component in the development of a corridor-wide housing strategy by SWLRT Community Works, along with its partner communities (Minneapolis, St. Louis Park, Edina, Hopkins, Minnetonka and Eden Prairie), and a full range of stakeholders. To date, considerable research and planning has already been done, inclusive of the SW Community Works Corridor Housing Inventory and the Investment Framework. The Housing Gaps Analysis interprets and builds upon these work elements and provides further research and analysis, culminating in recommendations intended to guide future planning that will “set the stage” for a “full range of housing choices” within the corridor.

Workplan component for housing include housing inventory completed in 2013, market feasability which is contained in investment framework and gaps analysis, the gaps analysis completed in 2014, and the strategy and goals which will be completed in 2015.

The Housing Gaps Analysis provides recommendations for new residential development for the corridor as a whole, and for individual station areas, and identifies future supply gaps. The report discusses market inefficiencies and addresses the need for creative public/private partnerships that will help to facilitate the provision of a full range of housing choices in the corridor over the long-term.

Housing inventory key findings and gaps anlysis work scope questions

Demographics -- Key Findings:

The SWLRT corridor is home to 37,000 residents and 19,000 households. The majority (about 2/3) are renters. Trend is likely to continue, based on demographics, lifestyle, and market factors.

The Twin Cities Metro Area is expected to grow by 11,000 to 13,000 households/year through 2030. 80% of growth is expected to be households without children, and nearly 1/3 of regional growth expected to be single-person households.

Millennials and Baby Boomers are having a major impact on Twin Cities housing market. Both segments are drawn to high-density multifamily housing products which feature “efficiency in living,” and connectivity to work, goods/services, public facilities, and entertainment/amenities. We expect that TOD housing products and SWLRT will appeal to both market segments.

Corridor Employment – Key Findings:

107,000 workers in corridor -- The corridor features a strong corporate presence, with a deep and diverse economic base.  The corridor provides a “full range” of jobs, ranging from entry-level part time positions up to high-level management and executive positions in a wide range of industries.

Corridor workers a target for new TOD housing -- Less than 4% of the corridor’s 107,000 workers also reside within ½ mile of SWLRT presently. New housing products near SWLRT are expected to appeal to corridor workers.

Earnings & housing affordability -- Importantly, we note that a full 20% of the corridor employee-base earns less than $1,250 per month.  A household with a single wage-earner at this level could afford a monthly housing payment of just $375 per month.  Two workers at this level could afford a monthly housing cost of about $750.  Worker earnings were a key factor considered by Marquette Advisors in developing recommendations for housing construction & preservation in the corridor.

Educational Facilities -- Key Findings:

Expect modest impact of housing development upon local schools – Considering demographic trends and expected development patterns, fueled by growth from single-persons households and households without children, TOD housing developments along SWLRT are not expected to have a substantial impact on enrollment at any one educational facility within the corridor.

TOD may boost open enrollment – The development of SWLRT will improve connectivity of residents with schools and, thus, will create opportunities for open enrollment, with students utilizing SWLRT to commute to/from their place of residence to school.

SWLRT housing will likely appeal to school teachers and other staff – The development of new workforce and market rate rental housing, as well as entry-level for sale housing, may in fact be attractive to teachers and other school staff who presently commute longer distances due to an affordability gap between current salaries and corridor housing costs.

Residential Development Outlook – Key Findings:

Market demand = 13,000  Outlook – Key Fin (2015-2030). This represents a gap between existing housing inventory and the number of households who will want to live along the corridor.

Recommended Development Goal = 11,000 new units. Tempered to reflect development constraints: land availability, land use factors, development cost factors, etc.  However, at least 20% of these units still not feasible but for public/private partnerships and gap financing.

A table showing recommended new residential development by station area, average median income in rentals and ownership and total units.

New unit mix - 90% rental, 10% home ownership -- Why?  Considers demographics, economics and lifestyle factors. Regional and corridor growth dominated by small households. Market preference for efficient and convenience in housing, with strong connectivity to jobs and “urban” amenities.  Approximately 1/3 of new construction recommended affordable up to 100% of AMI.

  • 12% (1,300 units) - <60% AMI
  • 9% (1,000 units) - 61% to 80% AMI
  • 12% (1,300 units)  - 61% to 80% AMI

Station Area recommendations for new construction take into account the following factors:

  • Current housing inventory, demographic composition and economic base
  • Land availability - ownership of undeveloped and/or under-utilized parcels
  • Characteristics of surrounding land use (as-is and future expectations)
  • Proximity to jobs, types of jobs & incomes levels, proximity to goods/services, public and educational facilities and other modes of transit

Mixed-income residential development a “best practice” related to inclusionary housing in the corridor -- Publicly owned sites present the best short-term opportunity for this type of development.

Housing Preservation – Key Findings:

Affordable housing is a primary asset within the corridor presently – Corridor features an estimated 7,700 units which are affordable to households earning <60% of AMI, representing almost ½ of the existing rental stock.

Limited risk of gentrification – Existing supply includes older product mix (1960’s/70’s vintage).  Rents in many cases are well below 60% of AMI target. Age/quality and market obsolescence limits potential for major rent increases.

Housing preservation far less expensive than construction of new units – Providing new housing at levels which are affordable to households earning <60% of AMI, even up to 80-100% of AMI, is a significant challenge due to cost factors.  Barriers to development are significant. Thus, particular focus should be given to preserving and improving the existing housing stock.

Pie chart showing the number of occurrences and in what types of housing that people could afford. 3,800 for apartment buildings with 12 or more units. 2,900 for small buildings, townhouses and other rentals. 1,000 for subsidized housing such as public housing, section 8 and section 42.

Corridor Strengths – Key Findings:

Strong demographics and high-quality real estate – The SW corridor features some of the region’s highest-quality and highest-valued real estate. High-quality housing stock, stable neighborhoods, close to parks and recreational opportunities, shopping and restaurants

Strong corporate presence and jobs base -- There corridor features depth and diversity in its employment base, with 107,000 jobs in the corridor. Proximity of the station areas to major employment nodes bodes well for connectivity and desirability of future TOD housing.

City staff are experienced and familiar with development tools – Our analysis and interviews indicates that city planning staff and administration have a firm grasp of redevelopment “tools” and experience in the types of public/private partnerships which will be required to achieve corridor housing goals.

Key Development Challenges:

Limited vacant land supply and shortage of publicly-owned sites – Much of the corridor is already built-out.  The limited supply of developable land, paired with expected strong market demand for housing (and commercial forms of development) results in escalating land values.  This poses the single-most significant barrier to the development of a full range of housing choices in many station areas.

Land use issues reduce redevelopment potential - Private ownership; highest and best use issues. Redevelopment is complicated and costly.  It requires substantial investment or sale by private land/property owners.  The objectives and risk tolerance of current property owners varies substantially.

Auto-oriented areas, lacking pedestrian/bike friendly amenities & connectivity – Several of the station areas are presently auto-oriented.  Considerable investment in pedestrian/bike connectivity and public realm elements will be required in order to create the type of lifestyle environment preferred by prospective TOD residents.

Many stations lack street "vibrancy" and supporting commercial/restaurant nodes and public amenities – The region’s population base has shown a strong preference for housing in mixed-use neighborhoods which provide walkability and easy access to a variety of amenities – shops, restaurants, parks, trails, and recreational features, and entertainment.  These elements should be incorporated in station area planning.

Recommendations & Next Steps:

Consensus, “buy-in” and commitment are critical to success – Joint powers agreements and representation of all corridor communities and stakeholder groups will be paramount to achieving    The housing goals set forth by SWLRT Community Works.

Housing preservation strategy needed to invest in quality and sustainability of existing affordable housing stock – The strategy and investment model(s) should include the following elements:

  • Deploys capital which invests in the quality, sustainability and long-term affordability of this aging housing stock.  This will require dedicated funds and creative partnerships with private owners and non-profit development/management partners.
  • Match services with the resident base -- fostering upward mobility within the community’s economy and housing market.  Partnerships involving the public sector and varied advocate groups with corporate partners and educational institutions should be developed in order to provide services such as job/life skills education and household economics/financial advisory services and counseling.

Develop “branding” and promotions strategy for SWLRT lifestyle – What is TOD?  And what kind of lifestyle will TOD housing and SWLRT provide?  Promote market awareness of the benefits to TOD living in SW corridor.

Station area master planning -- Focus on stations with significant public land ownership and near-term development opportunities.  This presents an opportunity for a “signature” development on SWLRT which demonstrates all desired “lifestyle” elements and provides a “full range” of housing choices.  Success is critical in short-term developments, and sets the stage for future success in other station areas.  To ensure success, the master planning process must engage a full range of stakeholders, both public and private.  The Corridor Development Initiative (CDI) model is a best-practice and should be an integral component of future station area planning, as it provides a framework for collaboration and consensus building around quality planning.

Develop consensus and adopt housing policy goals – The partner communities should work together to build consensus around the concept of “full housing choice” and preservation and production goals.  We suggest the creation of a coordinated SWLRT Housing Policy Overlay Zone, for the area within ½ mile of each LRT station.  This area should be established for application of housing goals, policy and oversight.  The structure and composition of which should be determined by the stakeholders, as buy-in from all corridor cities is key to success.  We recommend that cities maintain development review/approval authority, utilizing their own “toolbox” and strategies which promote housing development and preservation which is consistent with the goals established within the SWLRT housing strategy.

Establish a $200m+ TOD Affordable Housing Fund -- Why? Existing tools/strategies are not enough to have impact at major scale.  A dedicated funding source is needed to support construction of 1,300 new units at <60% of AMI and to preserve/improve 7,700 existing units affordable at <60% of AMI.

Fund Structure:

  • Independently financed pool of funds that provides a return to investors
  • More risk tolerant than traditional financing
  • Patient financing with longer term payback

Possible Capitalization:

  • Local foundations & intermediaries
  • Family funds and partnerships
  • Corporate interests (e.g. major businesses in SW corridor)
  • Traditional institutional investment sources (insurance companies, etc)

While Marquette Advisors believes a program which provides a return to investors and generates cash flow for re-investment is the preferred structure, some type of public/private alignment might work under certain governing circumstances. While not a charge of this engagement, Marquette believes that some form of overarching authority driving the Fund would enhance achievement of housing policy and development/preservation goals.

A $200 million fund, properly designed and leveraged, should be able to provide key (and currently missing) capital to drive development and preservation which meets stated housing production and preservation goals.

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