There is widespread agreement that our District is facing a housing crisis. A shortage of affordable housing for both renters and homebuyers has led to an increasing number of households that struggle to afford housing. Across the district, a third of households are “cost-burdened,” meaning that they spend more than 30% of their income on housing, and many spend more than 50%. For renters, nearly 1 in 2 households are cost-burdened. These numbers are driven by twin shortages of affordable housing for renters and for would-be homeowners. Homeownership is declining as a proportion of all households, due largely to a lack of options for buyers between 50 and 100% of area median income (AMI).
These alarming numbers mask vast racial and income disparities. Among extremely low-income households in the Twin Cities Metro Area, nearly 80% spend more than half their income on housing. People of color in the Fifth are much more likely to be cost-burdened than white residents. And the disparity in homeownership rates between white and black households is one of the worst in the nation. The proportion of Black and Latinx households that own their home has actually declined in recent years. These patterns perpetuate disparities in household wealth.
The Fifth is a national leader on housing policy in many ways: expanding multi-family and inclusionary zoning, and working to preserve existing and naturally-occurring affordable housing. We are conscious of past policies that perpetuated racial disparities in housing and working to rectify them. Local governments are investing heavily in making our communities more affordable for residents. Even with these local initiatives, however, our housing assistance is oversubscribed and undersupplied. In the Fifth and nationwide, many more households need assistance than those that receive it. This is largely a result of tepid federal support and funding for public housing in recent decades, along with increasing income inequality driven by an economy in which gains largely accrue to the well-off.
There is significantly more that we can do on the federal level to address the housing crisis, reduce housing instability, and improve security for families in the Fifth and nationwide. Tackling the affordability crisis must do two things: increase the stock of affordable housing and expand assistance to more families who need it. I believe that the best way to do this is to invest in the construction of new public housing, restore and update existing public housing, and expand Housing Choice Vouchers to subsidize rent for families whose incomes cannot support market-rate housing. We must make it possible for districts like ours to make good on their promises to make housing affordable and accessible to all residents.
Ensuring Affordability for Renters
Public housing is housing that is owned and operated by local public housing agencies and supported by funding through the Department of Housing and Urban Development. Because it is publicly owned, it’s affordability mandate doesn’t expire, which makes it a secure and efficient way to maintain affordable housing over the long-term. Public housing is also particularly effective at providing housing for extremely low-income renters with 30% or less area median income. Despite these advantages, we have not invested significantly in public housing or added to our federal public housing supply since the 1970s. Partly as a result, we face an increasing shortage of affordable housing: we assist a smaller proportion of eligible renters now than we did a decade ago. I support providing $75 billion in federal funding for state public housing agencies and the Indian Public Housing Block Grant to construct new public housing and rehabilitate existing public housing to make it safer and more energy efficient.
In addition to increasing the supply of public housing, I also support expanding the Housing Choice Voucher (HCV) subsidy program that helps renters pay for private housing in the neighborhood of their choice. Vouchers have been shown to be particularly effective at eliminating housing instability, homelessness, and crowding, as well as enabling more households and families to live in low-poverty areas. The evidence suggests that vouchers are a particularly cost-effective type of housing assistance, whereby the cost of the subsidy is offset by fewer demands on social services. Vouchers also successfully target extremely low-income renters who consistently represent the most cost-burdened households. Right now, due to a lack of federal investment, only 1 in 4 households eligible for a voucher receives one. For renters that are able to get on the waiting list for vouchers in Minneapolis, it can take up to a decade to receive one. We need to increase our investment in the HCV program to provide many more households with affordable housing. When families have stable, affordable housing, they are able to maintain stable employment, spend and consume more in the local economy, and we collectively spend less on emergency social services. Housing vouchers are a particularly effective way of accomplishing these goals.
Families that receive vouchers do better when they can move to low-poverty areas. In some places, however, families’ location options are limited by the voucher caps tied to rent prices across the entire metropolitan area, which may be too low for the areas families would otherwise choose. This is why I support implementing a Small Area Fair Market Rent policy for subsidies, which will allow the voucher amount to be determined on the basis of rents in the neighborhood, opening up more private market options for recipients of housing assistance. This would also help reduce segregation which leads to racially-concentrated areas of affluence and poverty. We must also pass the Fair Housing Improvement Act to ensure landlords can’t discriminate against housing assistance recipients.
Public-private partnerships to build affordable housing, including Section 8 project-based subsidies and the low-income housing tax credit (LIHTC), have a role to play in providing affordable housing, but they should not be the sole focus of our efforts for a long-term solution because they are less effective at maintaining affordability in the long-run. I believe Public Housing and Housing Choice Vouchers are the best investments to ensure long-term affordability and help families most in need.
Expanding the housing supply and subsidies for renter households is only one part of the solution to the housing problem. We must also support homeownership, particularly among groups with low current rates of ownership, including Black and lower-income families. Homeownership is the most reliable method of building household and generational wealth in America, yet too many families and communities of color have been historically shut out of homeownership opportunities, both in the Fifth and nationwide. As the housing crisis that ushered in the Great Recession painfully demonstrated, homes must be affordable to effectively build wealth. Expanding homeownership to historically excluded groups will take efforts at all levels, but the federal government can promote homeownership in several ways.
One effective way of increasing homeownership among low-income and traditionally disadvantaged households is through investment in nonprofit Community Land Trusts (CLTs). CLTs are effective at preserving affordability, retaining the value of the initial public subsidy, expanding homeownership, and increasing household wealth. CLTs have also been used successfully as a stepping stone for families to afford fair-market housing. I support increasing the annual funding of the Community Development Block Grant program to $10 billion, and increasing the annual funding of HOME Investment Partnerships Program to $2 billion. Both programs are important sources of funding for Community Land Trusts, and have been shown separately to create jobs and successfully leverage private investment. Homeownership remains the most reliable source of household wealth across America, and we must make it easier for all households to own their own home. Supporting CLTs is one smart step in expanding access to affordable homeownership.
We also need to address the legacy of discriminatory lending practices that still affects the ability of people of color to obtain loans and join the ranks of homeownership. In addition to strengthening the regulation of financial institutions to ensure that they do not discriminate against borrowers of color or against entire communities, I support former Vice President Biden’s call for the establishment of a public credit rating agency housed in the Consumer Financial Protection Bureau. Credit scores are incredibly important for borrowers, affecting the rate at which households are able to borrow and, sometimes, whether they are able to borrow at all. However, the existing credit rating agencies and algorithms perpetuate racial inequities by drawing heavily on data with significant legacies of discriminatory practices, such as redlining and predatory lending. A public credit rating agency would help rectify these biases by testing and utilizing predictive data that do not perpetuate biases. It offers a clear opportunity to begin to eradicate the legacy of discrimination in lending, employment, and housing that harm the creditworthiness of low-income households and households of color under the current system.
How We Will Pay for This
We can pay for these investments by repealing the Trump Administration’s estate tax cut and reducing the exemption to $2.5 million per person. I also support eliminating the Grantor Retained Annuity Trust (GRAT) which allows the wealthiest families to pass significant amounts of wealth onto their descendants tax free. More than a trillion dollars in wealth is inherited each year, but even before the Trump tax cuts, less than 1% of that wealth was taxed. We cannot allow the continuous, untaxed accumulation of household wealth by the top 1% while increasing numbers of families struggle to afford housing.
Our housing crisis is complex and it requires a multifaceted solution. We’re lucky to live in a District that is taking the lead on affordable housing nationwide. I believe the federal government has an important role to play in complementing local efforts by expanding the public housing supply, providing more support to low-income renters, and facilitating homeownership among lower-income households and households of color. Stable housing is good for our communities, good for our families, and good for our economy.