Five15 on the Park - 515 15th Avenue South

Calhoun-Isles, Cedar-Riverside, Longfellow, Nokomis, Phillips, Powderhorn, and Southwest
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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 28th, 2014, 12:56 pm

I never said we should "draw a big red line" around Minneapolis and Saint Paul. But the amount of affordable housing investment in the two central cities is vastly out of proportion with the need. For instance, see the Met Council's 2006 study allocating new affordable construction across the metro area: http://www.metrocouncil.org/getattachme ... c1fb/.aspx

It suggests that only 13 percent of new units should be allocated in the core cities, and allocates large shares to suburban job centers. But the actual share of affordable housing funding spent in the cities is somewhere closer to 40 or 50 percent of the regional total. That has very real consequences for the perpetuation of economic and racial segregation in the region.

It's not just about it being in Minneapolis, either: I'd be a lot more inclined to support a project like Five15 if it were elsewhere in the city. But that disproportionate central city investment is almost invariably dumped into large-scale projects located in the city's poorest and most racially segregated neighborhoods. Five15 itself is about the worst example of this in recent memory: it's literally wedged into a corner behind the city's largest affordable housing complex, which is itself notoriously segregated. (As I mentioned earlier, it's so bad it probably violates the Fair Housing Act, although that's neither here nor there until someone steps up to make a complaint.)

I'm not sure I follow your reasoning on rent restrictions. It's important whether a unit is rent-restricted because that determines whether it qualifies for subsidy, whether it must accept Section 8 vouchers, and whether it can accept middle- or high-income tenants. But market-rate units (as defined for the purposes of allocating LIHTC and other subsidies) are still accessible to lower incomes, because they can still be lower than the regional average and because people can simply dedicate a larger chunk of their monthly income to rent than LIHTC allows.

But it's true there's a lot less difference between a rent-restricted unit and a market-rate unit in Cedar-Riverside than in, say, Uptown, or Edina. That's the point: you're dumping a lot of money into projects to create housing opportunities that aren't that very distinct from the housing that already exists in these neighborhoods.

If you've got evidence of affordable housing attracting transformative private investment to a traditionally distressed neighborhood, please share it. Even the evidence of LIHTC revitalization seems to suggest that it's more at the margins than catalytic. I wasn't around the cities in the 90s, but my understanding is that North Loop and the Mill District weren't segregated concentrations of poverty -- they were just largely undeveloped. That's obviously very different than the present case, where you're putting housing for poor people in a neighborhood that already contains a lot of poor people.

Finally, the MinnPost article isn't describing the provision of "housing across the rent spectrum," an outcome I would of course support. It's describing (as a positive) the concentration of affordable housing in poor neighborhoods:
In fact, if you pinpoint the new and pending developments on a map of the Green Line, you'd find most of the market-rate housing bunched where market-rate housing already exists: in Minneapolis' North Loop and Downtown East neighborhoods and in downtown St. Paul. Affordable units are concentrated in Frogtown and along University Avenue. Environs around the U of M will be receiving large clumps of — duh — student housing.

If you'll look at the people behind the Big Picture report, you'll see that the majority of them are affordable housing developers (or are from organizations intimately involved in its construction, like LISC).

(As for my background, I think my concern about segregration should make clear that I'm coming to this from a fair housing perspective first and foremost, but I don't think that's at all incompatible with the urbanist priorities you more typically see around here. Complementary, more like.)
Last edited by WHS on May 28th, 2014, 1:28 pm, edited 1 time in total.

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Re: Five15 On the Park - (1515 5th Street South)

Postby Wedgeguy » May 28th, 2014, 1:27 pm

I think you are confusing racially segregated neighborhood, with a neighborhood that has kind of become one of the epic center for the Somali community. Just like many immigrant before them. People tend to cluster with other of their same origins. Like other immigrant group, they are now finding other areas in the city and the burbs to live. With the mix of university students and other business I don't see this area as a concentrated issue like parts of the N MPLS.

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Re: Five15 On the Park - (1515 5th Street South)

Postby FISHMANPET » May 28th, 2014, 1:53 pm

I don't think it's in anybody's best interest to break up the East African immigrant community that's grown in Cedar Riverside.

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Re: Five15 On the Park - (1515 5th Street South)

Postby Nick » May 28th, 2014, 3:11 pm

As a quick note, I don't know that I really think of Cedar-Riverside as a concentration of poverty in the same way that other parts of the City are. The incomes are lower because it's a destination for immigrants. Of course they're not rolling in it. But what immigrant group hasn't prospered after a generation? It'll work out.

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Re: Five15 On the Park - (1515 5th Street South)

Postby Wedgeguy » May 29th, 2014, 10:40 am

Nick wrote:As a quick note, I don't know that I really think of Cedar-Riverside as a concentration of poverty in the same way that other parts of the City are. The incomes are lower because it's a destination for immigrants. Of course they're not rolling in it. But what immigrant group hasn't prospered after a generation? It'll work out.
There are towers in Cedar-Riverside that are more market rate and not all immigrants. I'm starting to see immigrant pockets forming out in the first ring burbs as they try established and go for home ownership or larger places to raise their families. Like the Hmongs back in the early 80's and the Latino community. They like to live where they feel more like a community. As time goes on they will slowly spread out over the generations.

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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 29th, 2014, 12:24 pm

Wedgeguy wrote: There are towers in Cedar-Riverside that are more market rate and not all immigrants. I'm starting to see immigrant pockets forming out in the first ring burbs as they try established and go for home ownership or larger places to raise their families. Like the Hmongs back in the early 80's and the Latino community. They like to live where they feel more like a community. As time goes on they will slowly spread out over the generations.
But the areas of concentrated poverty and segregation where the Hmong and Latino communities initially took root are still segregated and and impoverished. This is why we have to be aggressive about preventing these clusters from forming, and proactive about addressing them once they do form -- the consequences for our city are long-lasting. Cedar-Riverside is no exception.

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Re: Five15 On the Park - (1515 5th Street South)

Postby LakeCharles » May 29th, 2014, 12:57 pm

The median household income in that census tract was $13,511 as of the latest census data. That is the second lowest of any census tract in the state.

http://www.minnpost.com/data/2013/12/ma ... -minnesota

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Re: Five15 On the Park - (1515 5th Street South)

Postby mattaudio » May 29th, 2014, 1:16 pm

Could that partially be explained by the large number of college students living in that precinct?

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Re: Five15 On the Park - (1515 5th Street South)

Postby LakeCharles » May 29th, 2014, 1:31 pm

I would think that would be a large part of it. The other tracts that students are a large portion of hover around the $16-17k mark. But it's the closest income data that I could find.

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Re: Five15 On the Park - (1515 5th Street South)

Postby Nick » May 29th, 2014, 3:20 pm

LakeCharles wrote:The median household income in that census tract was $13,511 as of the latest census data. That is the second lowest of any census tract in the state.

http://www.minnpost.com/data/2013/12/ma ... -minnesota
To continue talking out of my ass, I would bet (?) that that census tract probably has a lot more unreported income than, say, Eden Prairie. Which isn't to say "crack" but cash under the table, bartering, etc etc etc.

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Re: Five15 On the Park - (1515 5th Street South)

Postby tab » May 29th, 2014, 4:21 pm

With the way public housing rents are calculated (30% of household income), the families at median income for the census tract are paying monthly rents of roughly $340 ($13,511 x 30% / 12).

The rents at Five15 will start at about $700 for a studio, and top out at around $1,150 for a 3-bedroom apartment, based on tax-credit rent levels at 50% and 60% of area median. That is for the affordable half of the project, and the market-rate half will have higher rents than the tax-credit units.

As a project that is 50% market-rate, it’s not implausible that the average income of the population at Five15 will land somewhere around $40k/year, or more than double the current median income of the census tract. (Another meaningful detail: in Public Housing, when your income increases, so does your rent, which gives families an incentive to leave as soon as their income increases, thus vacating their apartment for someone who needs it more than they do. Not so with Tax Credit housing. Once you qualify, you may remain in the property, paying the same rent as your next-door neighbor, even after you get a better job and your income increases.)

From the vantage point of someone earning six figures, the difference between $13k/year and $40k/year might not seem significant. But I’d argue that it is. For one thing, it would be a lot simpler to convince a bank to finance a purely market-rate development if you can point to a successful property with 130 market-rate apartments that are similarly priced and fully occupied right next door.

Given that Fine Associates owns land for a Phase II and Phase III project adjacent to Five15, they have every incentive to build something that proves the market for their next phases.

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Re: Five15 On the Park - (1515 5th Street South)

Postby Wedgeguy » May 29th, 2014, 9:31 pm

Nick wrote:
LakeCharles wrote:The median household income in that census tract was $13,511 as of the latest census data. That is the second lowest of any census tract in the state.

http://www.minnpost.com/data/2013/12/ma ... -minnesota
To continue talking out of my ass, I would bet (?) that that census tract probably has a lot more unreported income than, say, Eden Prairie. Which isn't to say "crack" but cash under the table, bartering, etc etc etc.
I will agree with you there Nick. They are more used to using barter and trades where money does not change hand. There is work being done in the cities with work to improve things. But we don't have enough funds for all of the pots to get filled and fixed. When on assistance you will find many will do things so that they do not show that they are making income.

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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 30th, 2014, 8:21 am

tab wrote:With the way public housing rents are calculated (30% of household income), the families at median income for the census tract are paying monthly rents of roughly $340 ($13,511 x 30% / 12).

The rents at Five15 will start at about $700 for a studio, and top out at around $1,150 for a 3-bedroom apartment, based on tax-credit rent levels at 50% and 60% of area median. That is for the affordable half of the project, and the market-rate half will have higher rents than the tax-credit units.

As a project that is 50% market-rate, it’s not implausible that the average income of the population at Five15 will land somewhere around $40k/year, or more than double the current median income of the census tract. (Another meaningful detail: in Public Housing, when your income increases, so does your rent, which gives families an incentive to leave as soon as their income increases, thus vacating their apartment for someone who needs it more than they do. Not so with Tax Credit housing. Once you qualify, you may remain in the property, paying the same rent as your next-door neighbor, even after you get a better job and your income increases.)

From the vantage point of someone earning six figures, the difference between $13k/year and $40k/year might not seem significant. But I’d argue that it is. For one thing, it would be a lot simpler to convince a bank to finance a purely market-rate development if you can point to a successful property with 130 market-rate apartments that are similarly priced and fully occupied right next door.
I'm not sure I follow you on any of this. Who thinks the difference between $13k and $40k a year is not significant? That's a massive gap, reaching from near the poverty line (or below it, if there's more than one person in the household) to above Minnesota's average individual income.

But you seem to be operating under the assumption that simply building units and calling them "market-rate" would then attract residents making over $40k a year -- and that the LIHTC units will attract residents paying the full rent, instead of relying on Section 8 vouchers. I can't see how this is remotely plausible, given the characteristics of the other housing in the area. Nor, for that matter, the demographics of LIHTC occupants across Minneapolis.

It's not like building affordable housing with tax credits is something with which we have no experience, or there's no data on occupancy. MN Housing collects data on residents of these units. The thousands of LIHTC units across the city -- including the 1200 right next door to Five15 -- are, predictably enough, virtually all occupied by nonwhite families with very low incomes.

We can talk about students and unreported income all day, but Cedar-Riverside is not the only neighborhood with these features. The fact remains: it is an exceptionally poor area, among the poorest in the city. People who occupy housing (affordable or otherwise) in this neighborhood are also likely to be very poor. And when you build affordable housing here, you are creating segregation and concentrating poverty. It's a terrible use of $50M of public subsidy.

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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 30th, 2014, 8:25 am

I mean, we don't have to wonder, we can just look at other recent, huge, ostensibly mixed-income LIHTC developments. The Franklin-Portland project, for instance. It's about 50% composed of market-rate units. There's no public data on the occupants -- but does anyone really believe that half of its residents are making $40k a year?

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Re: Five15 On the Park - (1515 5th Street South)

Postby mattaudio » May 30th, 2014, 8:38 am

So the numbers just sank in to me... the average household income there is $13k. That's insane. There's such huge variations in these numbers in neighborhoods where home values are not that different. I wonder how much of this is also explained by roommate situations where entire household (cumulative) income is not reported.

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Re: Five15 On the Park - (1515 5th Street South)

Postby tab » May 30th, 2014, 10:48 am

The phases of Franklin-Portland Gateway that have been built have a total of 120 apartments, of which 29 (or 24%) are market rate. The affordable apartments at Franklin-Portland are mostly restricted to 50% of area median, whereas the affordable apartments at Five15 include many at 60% of area median. Long story short, Five15 will bring more than 4x the market rate apartments to Cedar Riverside than Phases 1-3 of Franklin-Portland brought to Ventura Village.
And I don't mean to slight Franklin-Portland Gateway by any means. Everyone is entitled to their own opinion, but mine is that the developments have been a huge improvement over the vacant gas stations that were there before.

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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 30th, 2014, 11:56 am

But no one is arguing that, all else equal, these sorts of developments are worse than vacant gas stations or abandoned restaurants (well, someone might be, but not me). The problem is that there's a huge opportunity cost to these projects, because there are very limited public resources dedicated to providing affordable housing, and demand for this housing far outstrips supply. We can build a limited number of affordable units each year, and we can either build them in a high-income, high-opportunity neighborhood, or in a low-income, low-opportunity, segregated neighborhood. As long as that's true, I don't think it matters whether a lot is better off for having affordable housing built on it. I'm a lot more concerned about whether the people in the housing are better off for living where they do. And given the immense harm caused by perpetuating economically and racially segregated living patterns, it's hard to think that they are.

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Re: Five15 On the Park - (1515 5th Street South)

Postby LakeCharles » May 30th, 2014, 12:41 pm

I don't know anything about affordable housing (shame on me) so I'm just trying to learn here. Wouldn't it potentially be a problem for very poor people to put affordable housing in an affluent neighborhood? If they are restricted to 50% of the area's median income, then if you put an affordable apartment in Lynnhurst, anyone making under $60k a year could live there. That means young professionals who don't necessarily need public assistance could snap up all the affordable apartments in Lynnhurst, depriving needier families of that option.

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Re: Five15 On the Park - (1515 5th Street South)

Postby MNdible » May 30th, 2014, 12:46 pm

Question: Is it better (for the residents) to disperse affordable housing to locations which lack the access to support services and high quality transit options?

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Re: Five15 On the Park - (1515 5th Street South)

Postby WHS » May 30th, 2014, 1:20 pm

LakeCharles wrote:I don't know anything about affordable housing (shame on me) so I'm just trying to learn here. Wouldn't it potentially be a problem for very poor people to put affordable housing in an affluent neighborhood? If they are restricted to 50% of the area's median income, then if you put an affordable apartment in Lynnhurst, anyone making under $60k a year could live there. That means young professionals who don't necessarily need public assistance could snap up all the affordable apartments in Lynnhurst, depriving needier families of that option.
AMI is set regionally, so the units will cost the same no matter where you put them. There are some concerns -- not entirely unjustified -- that affordable housing built in the far-flung suburbs will end up occupied by essentially the same people who currently live in those suburbs. There's no doubt this happens to some extent. With that said, in the MN Housing occupancy figures I've seen, suburban projects actually look pretty good from a fair housing perspective -- that is to say, they're frequently occupied by the type of low-income, nonwhite families that have traditionally been trapped in the core cities.
MNdible wrote:Question: Is it better (for the residents) to disperse affordable housing to locations which lack the access to support services and high quality transit options?
A great many affordable housing residents want to live in these locations. Waiting lists in the suburbs are extremely long. They have far, far better schools, better entry-level job opportunities, are safer, generate better health outcomes, and are just generally considered friendlier places for families to live than poor urban neighborhoods. Access to transit is obviously fantastic if you can get it, but is, in my experience, generally prioritized far below schools and jobs.

You don't just have to take my word for it, though: the Met Council's Housing Need report weighs current supply, expected population growth, access to jobs, and transportation to generate projections of need. (Note that this doesn't even address things like superior suburban schools or current concentrations of poverty and segregation.) It's telling how low the central cities' share ends up being: a combined total of 13 percent. You can check it out here: http://www.metrocouncil.org/getattachme ... c1fb/.aspx


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