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Greater Minnesota has jobs, but not enough homes

Nov 23, 2017 04:40PM ● Published by Editor

Perham, Worthington, Thief River Falls, Jackson, Rochester, Grand Marais and many others are poster children for the workforce housing need. 

By Don Davis from The Duluth News Tribune - November 23, 2017

ST. PAUL — The story is that greater Minnesota loses population because there are not enough jobs.

However, many greater Minnesota communities actually have plenty of jobs, leaving areas short of housing for workers that businesses and industries need.

Some industries have resorted to busing in workers and some have helped finance housing in an effort to attract workers.

It is a story most Minnesotans do not know, but one that keeps city and business leaders awake at night.

Some experts guess that up to 7,500 new homes are needed, but no one really knows.

Perham, a 3,000-population city in western Minnesota, is one of the lucky ones in jobs, but unlucky in housing.

"The local temperature is just proving that we can keep growing and keep building," City Manager Jonathan Smith said.

The problem is, he added, "we can't build what we consider affordable homes any more."

Finances do not work out for private developers to build apartment houses and make a profit. Most new greater Minnesota apartment complexes are built with finance packages made up of private money, such as from banks, government tax breaks, government funds and aid private nonprofit organizations.

President Warren Hanson of the Greater Minnesota Housing Fund said it is common for housing projects to draw funds from 10 to 15 government and private sources. His organization often helps to coordinate funding for projects around the state, including in the Twin Cities.

While the fund provides money, it is different than a bank, Hanson said. "A bank probably would not be holding your hand through the process. ... We come in where the bank stops."

Minnesota Housing, a state agency, has invested more than $38 million in housing projects since 2013.This year, projects it helps fund are spending $127 million in private and government investment.

Cities with booming industries like in Perham, Worthington, Thief River Falls, Jackson, Rochester, Grand Marais and many others are poster children for the workforce housing need. But towns without rapidly expanding industries also are running out of homes.

"We are one of the few communities without a major manufacturer that has actually been able to grow." Ada City Administrator James Leiman said, quickly turning to the town's lack of housing. "We have a lot of homes available, but they are fixer uppers," Leiman said. "That is typically not what people want to have." Houses cheaper than $50,000 "tend to require a lot of work," the city administrator said, adding that his city is not getting new condominiums, townhouses and apartments. When houses costing $80,000 to $140,000go on sale, he added, they "are on the market for a day or two, if that." The Homes for All foundation reports that the five fields with the most projected openings in the next five years pay median wages of $18,000 to $23,00 a year, a level that makes it difficult to afford a home. Workers are not the only ones hurting due to housing shortages. Companies are, too.

"They simply cannot recruit employees," state Housing Commissioner Mary Tingerthal said.

Carolyn Hampel lives in an apartment complex that received construction funding from a variety of sources.

The 42-unit Eagle Ridge Townhomes development in Jackson houses residents of many ethnic backgrounds and ages, Hampel said.

Rents vary from $450 to $800 a month, she said.

Hampel said she sold her old five-bedroom house in Jackson to a grandniece, whose family lives there now.

"We as older people," the 70-year-old woman said, "if we can make a home for a family, that is a good thing."

The AGCO farm equipment manufacturing plant in Jackson has employees from throughout southwestern Minnesota, northwestern Iowa and eastern South Dakota. The company has bused in workers who cannot find housing close.

CEO Rick Goodemann of the Slayton-based Southwest Minnesota Housing Partnership said that in places like Jackson and Worthington, "almost all the housing that has been developed has been developed with a federal subsidy."

A new law expands the use of a city tax-break program, called tax increment financing, to be used for greater Minnesota workforce housing in communities that show they lack homes. Housing advocates say more law changes and funding are needed.

"We need to get the attention of the Legislature to take this seriously," Goodemann said.

Foundations and other private nonprofit groups provide loans and grants. Cities often extend streets and utilities into areas new developments are planned,.

Despite work of multitude organizations, Goodemann said, there remains a "huge void" of housing for people earning $16 an hour or less.

While new apartments are the most common workforce housing investments, existing homes are being rehabilitated, too. However, Goodemann said, "our housing is deteriorating faster than we can rehab it."

The housing shortage, Goodemann said, "is now starting to strangle economic growth. ... With stagnant wages and ever-increasing development costs, it is pretty gloomy."

"We have far more (housing) demand than the construction industry can provide," he added.

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