South Shore Phil Anderson

Building affordable housing

More than 50 years of reliance on the free market has not solved the problem

Duluth “...has a shortage of the right increase. Real estate agents, mortgage types of housing to match client needs...” lenders, landlords, speculators and

“While the seeds of homelessness were sellers all have a vested interest in the planted in the 1960s and 1970s with de- price constantly increasing. Much of institutionalization of mentally ill people this is driven by speculators who make and loss of affordable housing money “flipping” propstock, widespread homelessness did not emerge until the SOUTH SHORE erties to exploit these price increases. Everyone 1980s. Several factors have affected its growth over the RUMINATIONS involved makes money at the expense of buyers and last two decades. Housing has renters. become scarcer for those with little money. Earnings from PHIL There is a simple reason why New York, employment and benefits have not kept pace with the cost of ANDERSON Seattle, Los Angeles and other parts of California housing for low income and have the highest rates of poor people (emphasis added) homeless in the country.

“In fact, it turns out that ending home- They also have very high costs of houslessness is significantly less expensive than ing. ignoring it.” A modest house that sells for

The above quotes are from the 2007 $150,000 in Minnesota or Wisconsin Duluth 10-year plan to end homeless- can be half a million dollars or more in ness. these places. As a result many people

People who work with the homeless are priced out of the market. Many in Duluth say a lack of appropriate and people can not afford a place to live. affordable housing is a major reason Even substandard housing can be too for homelessness. Solving the problems expensive. of insufficient affordable housing will In addition, wages for low income require creative local action. People workers have for many years been have to come together to build it. stagnant or declining (adjusted for

As is the case with other kinds of inflation) so this contributes to the economic development, solving hous- problems. ing problems must be a bottom up The commonly accepted economic solution. model says growth, jobs and prosperity

We can not expect to find solutions are created from the top down. Give through the free market. The free the super wealthy more and they will market is driven by profit and not the “invest” in the economy, jobs will be needs, or well being, of people. With created, and everyone else will benefit. free market real estate the “value” – A rising tide lifts all boats. that is the price – must continuously But it should be obvious that not all

boats are being lifted in our current economy. The statistics on stagnate wages, unemployment, underemployment and rising inequality are clear. We have more than 50 years of experience with this philosophy and prosperity has not trickled down.

Thankfully these free market “solutions” are not the only tools available. Contrary to common belief, the economy is a mixed economy. There are many nonprofit organizations and many cooperative businesses that exist to provide goods and services to people without profit being the primary objective.

We also have “benefit” (or “B”) corporations that have social, community, environmental and employment objectives in addition to profit. These organizational structures could be used to create affordable housing.

These alternatives are proven ways for people to come together and solve local problems. In the past when the “free” markets failed to provide electricity, telephone, or banking services to segments of the population (usually rural areas), cooperatives and credit unions were created to provide these needed services. The same can be done for affordable housing. Proven strategies like land trusts and cooperatives can ensure affordability.

These structures can be used to rehab older buildings or build new housing while creating jobs for low income and homeless people. Low income ownership, cooperative apartments, and cooperative senior housing are possible. These efforts are scalable and can be used to create temporary homeless camps, small “micro-housing,” or permanent long term solutions like the Steve O’Neil Apartments in Duluth.

Another win-win from building affordable housing is that it will cost taxpayers and charitable donors less than the current temporary band-aid programs. The Duluth plan to end homelessness documents this fact.

“National studies have determined that the average cost to provide housing and services for the most difficult cases, the chronically homeless, ranges from $13,000-$25,000 per year. In contrast, the cost to public systems each year a homeless individual is on the street comes to $40,000-$100,000. Not only is the outcome more humane, it is actually less expensive to end homelessness than to manage it.”

These numbers are 13 years old but probably still reflect the current situation.

Government must be part of the solution. Following WWII, the federal government made home ownership a major priority. Many working and middle class families were able to buy houses using GI Bill and Federal Home Loan Mortgage Corporation assistance. This created a boom in housing construction.

Currently government at the the state and federal levels have programs intended to support affordable housing which will be essential for local solutions. But given the current divisive political situation, it is unlikely there will be sufficient funding to meet all the needs.

In July, Governor Walz announced $100 million in rental and mortgage assistance to help prevent evictions, more homelessness, and help individuals and families impacted by COVID-19. This was part of the coronavirus economic relief legislation (CARES Act). In October, Walz signed into law a $1.9 billion bonding measure to fund public infrastructure projects. This bill included $116 million for creating affordable housing and assisting homeless shelters. But Lt. Governor Peggy Flanagan has said this is still not enough investment to solve all the housing needs.

The lack of affordable housing affects many people and not just the homeless, unemployed and low income people. Affordable housing is a win-win for many people. Across the country many working and middle class people can no longer afford the “American Dream” of home ownership.

Our daughter is a white collar professional with a decent income but, because she is single with only one income, she can’t afford to buy a house or condo where she lives on the west coast. Affordable housing is another example of how everyone is be better off when everyone is better off.

We can create the affordable housing. We can end homelessness. But local people will have to make it happen.