Even though it’s been over a year since COVID-19 public health emergencies were lifted, the affordable housing landscape remains unstable. Inflation, skyrocketing maintenance costs, as well as increased security costs have caused major financial hardship, especially for organizations like Alliance who keep our rents low to serve those left out of market rate housing opportunities.
As highlighted by a recent Federal Reserve Bank of Minneapolis study, “Talking ‘toilets, taxes, and tenants’: Challenges mount for apartment owners in the Twin Cities area”, the costs of maintaining properties for not only nonprofits and affordable housing, but for-profit and market rate managers as well, have skyrocketed. From maintenance to taxes, insurance premiums to building security, costs have increased in nearly every corner of the industry.
In response to these ongoing struggles the Minnesota Legislature introduced a lifeline for many organizations – the Stable Housing Organization Relief Program (SHORP). This one-time $50 million grant is designed to support non-profit affordable housing owners like us who are facing rising costs on all fronts. Alliance applied for this grant last fall and were awarded funds to go towards maintaining and stabilizing our properties.
These temporary relief measures like SHORP and RentHelpMN are crucial for nonprofit housing providers to maintain stability as we move out of COVID-19 and into the “new normal”, however, in many ways they are band-aid solutions. The bigger structural issues driving these financial challenges remain unsolved. For big for-profit owners, hiking up rents hasn’t been enough to patch the holes in their cash flow. And for affordable housing providers like us, raising rents often isn’t an option as it doesn’t align with our mission of providing affordable and deeply accessible housing.
Emily, an Alliance tenant who recently graduated with a master’s degree in Healthcare Management, expressed her concerns about the potential rent increase. “A rise in rent would be a significant challenge for our household, especially as I’m starting a career in my field,” she said. Emily believes that stable rents provide the foundation for stable housing, which in turn “offers a platform for a successful life where dreams become reality.” She added, “We’re just getting by as it is, so any increase in rent could bring unwanted stress.”
We need comprehensive, lasting solutions to address the long-term challenges this sector faces. The Minneapolis Fed report drives this point home further. It notes how owners both big and small, for-profit or nonprofit, affordable or market-rate, are all struggling with these financial strains. As the report puts it: “Owners large and small, for-profit and nonprofit, affordable and market-rate, locally based and national, all face significant challenges that, if left unaddressed, could endanger the region’s housing supply.”
While Alliance is grateful for support like SHORP, these measures provide only temporary relief. We need to keep advocating for policies that truly bolster affordable housing providers for the long haul. And it’s going to take a united effort to preserve affordable housing providers in not just Minnesota but across the country.
