City representatives from Austin to Winona to Worthington met for a housing summit in Austin Monday to discuss challenges and solutions for workforce housing in Minnesota.

A lack of workforce housing or individuals and families is seen as one of the most significant challenges southern Minnesota’s growing economy faces. It can make it difficult for businesses, schools, hospitals and others to attract workers.

First District U.S. Rep. Tim Walz, DFL-Mankato, who hosted the summit, said the issue is on everyone’s mind.

“I understand there’s folks in this room who’ve been working on this issue for decades,” Walz said. “This is nothing new for many of you.”

Walz said Minnesota has a vibrant and strong economy and the state is above full employment, which is attributed to hard-working individuals in communities. But the Minnesota Housing Finance Agency estimates about 4,500 to 7,500 additional rental units are needed across the state.

The issue is nothing new for Austin.

The conference was well-attended by community leaders from Austin such as Mayor Tom Stiehm, City Administrator Craig Clark, City Council members, committee members and a few residents. Other cities also sent their officials to the summit.

Clark said it was important the summit was held in Austin because it helps amplify the work done a committee formed by Stiehm to address the city’s housing needs. He added they learned from other communities and it sparked some ideas for the critical challenges they have related to housing.

“It feeds in the discussion right now, with where we’re at in the continuum of the ad-hoc committee, we went through quite a process, had several meetings,” Clark said. “We’re really starting to turn a corner now, looking at solutions.”

Clark said that without addressing a lack of housing at all demographic levels, cities like Austin would be at a competitive disadvantage to more prosperous areas of the state. The shortage threatens to impede employers’ ability to add jobs and grow the city’s economic base, he added.

Walz echoed that and agreed Austin was a good place to host the summit.

“Being down here, it’s a community that’s facing the same challenges,” Walz said. “The discussion seems like it would center what is happening here is happening in other places.”

Challenges

Four panelists identified problems such as attracting developers to build in the area, increasing construction costs, incomes remain stagnant, commuting from other cities, putting money into existing homes and home-buyer education.

Minnesota Housing Finance Agency Commissioner Mary Tingerthal said since 2000 the cost of housing, including rentals, across the state has increased by five percent and at the same time, the purchasing power of salaries has gone down 8 percent.

“What that means is that we have more and more households around the state that either can’t get housing or are paying more than 30 percent of their income for housing,” Tingerthal said. “We have over 600,000 households in Minnesota paying more than a third of their income for their housing.”

Tingerthal said renters pay upwards of 50 percent for their housing needs.

“We know the needs are unique in every single community,” Tingerthal said. “Housing is in short supply. We need it.”

Albert Lea City Manager Chad Adams said some of the problems identified in Albert Lea were difficulty attracting developers to the area, increasing construction costs and incomes remain stagnant.

“We’ve had businesses give testimonials that people have turned down jobs because they can’t find something that’s affordable or good quality,” Adams said. “They’re looking for a place to rent for a year before they fully commit to the community.”

Another issue is people who chose to commute into a city from another city where they found housing. Jenny Larson of Three Rivers Community Action said she’s heard of people driving to Austin from the Twin Cities area for work.

“That is true of other communities,” Larson said. “People will even drive into Rochester, and Mayo has buses to get their workforce into Rochester.”

U.S. Department of Agriculture Rural Development Housing Program Director Stephanie Vergin agreed and said there is a mismatch between where existing stock is and where development is occurring. Her program has financed 540 projects around Minnesota for low and moderate income housing.

She said there were no vacancies in Albert Lea, while 10 to 15 miles out in rural towns and areas there were all kinds of vacancies, but oftentimes people want to be right in town.

It was also discussed that putting money into existing homes is more agreeable than building completely new homes. Seniors are aging out of single-family homes and the idea is that it will open up a lot of opportunity for people to move into those homes, Larson said.

Adams agreed and said they’ve seen success with that type of program in Albert Lea and they would like to see more of it.

A large component is getting employers to the table and discussing with them to create programs for new employees who move into the area. Ideas included tax abatement programs and providing assistance with down payments on homes.

Larson said employers in Rochester pooled their lead under Mayo Clinic and were able to put together such a program.

“Employers want to be involved,” she said.

Another key issue was educating people about the home-buying process, especially for immigrants. Education would include homeownership training and financial counseling and even simple things such as how to use a furnace and how often to change the filters for families who aren’t used to cold climates like Minnesota. The goal would be to provide large family rental units and then move them into homeownership, Larson said.

The session ended with ideas for communities to hold their own smaller housing summits, having a concrete plan for people to follow, engaging the workforce and asking what type of housing they want.

Walz added it’s important to listen to the people who will live in these houses.

“It’s much broader than just saying build it and they will come,” he said.

Keynote address

Walz suggested restarting the rural caucus to talk to about these issues and that he hasn’t heard any of the presidential candidates mention housing in this year’s debates.

“The solutions aren’t going to come from the local community, they will come from rooms like this,” Walz said.

He said it’s important to see cities as connected to each other instead of as individual hubs and that housing in smaller communities is always one of his concerns.

“The endgame we want is a secure, prosperous economy where people can choose to live here, and they want to live here, I saw in the paper a while back someone said, ‘They may not move here for our values, but they stay here for them,’” Walz said. “The end state is where we all want to be. Prosperous communities where people have an opportunity if they get a good job, if they work hard, if they get a house, they can have their family live there.”

He said rural communities in Alaska, Mississippi, New York and other states also face the same issues. He also added improving existing legislation would benefit communities.

“We have unique communities here that people want to live in,” Walz said. “The optimism for economic growth is as high as I have ever seen it. We can solve this, you’ve already done it, you’ve done it many times. You’ve created jobs, you’ve financed projects, you’ve worked with communities as they come in and they’ll assimilate … a nice place to raise a family for a living in relative security, relative safety and beautiful surroundings.”

Solutions

Walz asked the panelists to take him through a successful housing project. Rochester Area Foundation Housing Initiative Director Steve Borchardt said it starts with community planning initiatives and understanding the community.

The second step is developing a plan and making sure it’s centered around an idea and then finally soliciting a developer to be interested in that area. Grants and partnerships are also key to moving the project forward.

Walz also brought up why models in one city might not work for another city.

Wes Butler of Minnesota Housing said it helps to have grants and the ones who have collaborations and resources are the most successful at receiving grants.

“It is a competition, especially when dealing with low income housing tax credit,” Butler said. “You have to be better than your competition.”

Rick Goodman of the Southwest Minnesota Housing Partnership said it helps to talk to city councils and ask them to get behind housing projects and financing or funding a comprehensive housing study and talking about that helps to identify solutions.