Richfield evaluates recommendations for affordable housing

As developers try to capitalize on a hot rental market, the city of Richfield is trying to determine how far its authority extends in protecting low-income tenants.

After hundreds of low-income renters were displaced from Crossroads Apartments last year, and after a similar scenario was narrowly avoided at another large Richfield apartment complex in April, city leaders gathered last month to assess their options to preserve affordable housing in Richfield.

Aeon, a nonprofit organization that buys properties to preserve affordable housing options, signed a purchase agreement in April for the 422-unit Seasons Park Apartments, keeping the property out of the hands of a developer who was thought to have designs on renovating the complex, which would have forced out low-income renters.

Shortly after Aeon signed the purchase agreement for Seasons Park, city leaders heard from the Housing Justice Center, which recommended ways to prevent similar close calls for financially vulnerable tenants.

Richfield city staff have since visited with other municipalities and affordable housing advocates to assess those recommendations. Community Development Director John Stark described what was learned from those meetings, describing Richfield’s options to members of the Richfield City Council and Housing and Redevelopment Authority during a July 17 meeting. Some of the suggested actions were viewed as at least partially feasible, while others were deemed legally risky or more appropriate for policymaking at the state level.

Among its lengthy list of suggestions, the Housing Justice Center had told city leaders that Richfield might initiate a rule requiring landlords to provide the city 90 days notice before selling their property, allowing affordable-housing preservation organizations like Aeon to acquire properties where rents would otherwise skyrocket under new ownership.

Stark recommended “we immediately implement this if there is any city HRA (Housing and Redevelopment Authority) or EDA (Economic Development Authority) money on a property.”

But there are practical considerations that could be limiting, City Attorney Mary Tietjen said. “I think enforcement really is the key concern with this particular tool,” Tietjen said.

Also, as with many of the city’s affordable housing preservation options, the city would be testing the legal waters with a 90-day policy. “Legally, at least in Minnesota, these issues are largely untested,” Tietjen warned.

Like with the 90-day rule, the feasibility of a suggestion to implement an ordinance requiring “just cause” for tenant evictions also depends on whether properties have assistance from the city, Stark said. Under Minnesota law, tenancy can be terminated by the renter or owner with notice in writing, and the city has no authority to require specific terms in lease agreements, Tietjen noted.

Determining case by case what constitutes “just cause” would prove problematic, according to Councilmember Edwina Garcia. “It’s too much of a legal issue, and we just can’t be judge and jury on something like this. This is really sensitive,” she said.

And anyway, Councilmember Simon Trautmann offered, “most problem tenants are not evicted. Most problem tenants have their tenancy run, and their lease is not renewed.”

Establishing a “just cause” ordinance could hinder owners who have legitimate reasons to evict a disruptive tenant and could therefore encourage absentee landlords, Trautmann added.

Another option suggested to the city is to provide financial assistance to preservation buyers. The Richfield Economic Development Authority already has $237,000 in its recommended 2018 budget for that purpose, Stark said. However, Mayor Pat Elliott reminded other city leaders that affordable housing isn’t Richfield’s only priority.

For instance, some businesses along 66th Street are “suffering immensely” due to the current reconstruction of the road, and some of the EDA’s $550,000 estimated 2018 budget should be used to assist businesses that are losing out on foot and vehicle traffic due to the road work.

The reconstruction project, “right now, is dispiritingly impacting Ward 1 and those businesses,” said Trautmann, who represents that area.

Help needed

Many of the Housing Justice Center’s suggestions are more appropriate for the state policymakers as opposed to municipalities, Stark outlined. Financing for housing rehabilitation is one example of that, beyond the relatively small contribution the city can make to that end, he said.

In fact, Stark added, “this is Richfield’s greatest need” regarding affordable housing. The city has brought the issue to legislators for the past seven or eight years, he said.

A similar reality applies to establishing an ordinance inspired by the law meant to protect tenants in mobile home parks by allowing them to collectively organize and make their own purchase offers – or solicit help from preservation buyers – when the land they rent goes for sale.

Providing such a right of first refusal is a challenge “bigger than the city of Richfield,” Stark said, calling for cities to work together to draft a state statute that mirrors the one applying to mobile home occupants.

There are other housing suggestions that, while feasible, bring their own legal risks, such as prohibiting Section 8 discrimination. Based on the Minnesota Human Rights Act, Richfield could establish that kind of ordinance, Tietjen advised.

“However,” she wrote in a report on Richfield’s potential housing actions, “the city could not mandate or require property owners to participate in Section 8.”

In outlining the potential legal costs of a Section 8 discrimination rule, Tietjen pointed to a lawsuit recently brought against the city of Minneapolis for recently passing just that kind of ordinance.

Adopting a Section 8 discrimination ordinance “could get the city into a situation where you could go forward and potentially be in the same boat where Minneapolis is right now,” she said.

“I think the term you might apply to me is, I’m a ‘fraidy cat on this one,” Stark admitted.

Councilmember Michael Howard, though, argued against waiting for the results of the Minneapolis, “just because this is an issue confronting our residents on a daily basis.”

“We’re not mandating that landlords accept Section 8 tenants,” Howard said. “We’re just saying you can’t outright discriminate against them. It just seems like a reasonable protection for residents and new tenants.”

Councilmember Maria Regan Gonzalez also noted the immediacy of residents’ needs. “They come to me day to day saying, ‘Here’s another 30-days notice. Here’s the conditions in my apartment. We have nowhere to go. We want to stay in Richfield,’” Regan Gonzalez said.

Signs of prosperity

While a hot real estate and rental market has made affordable housing a more pressing issue, those same market conditions can be viewed through another lens.

“I think it’s worth recognizing this is also the fruit of some success and prosperity on the part of Richfield too,” Trautmann said. “This is a good moment in the time of our city where our housing values have increased.”

And already, Richfield has a vast array of affordable housing. It just depends on the question: Affordable to whom? Sixty-three percent of Richfield’s rental housing units are affordable to people earning 50 percent of the median income, according to a city staff report. That puts Richfield first among Hennepin County cities.

The city’s ranking is more middling when evaluating affordability for tenants making 30 percent of median income. Ten percent of Richfield’s rental stock fits that criteria. Out of six identified “peer communities,” Golden Valley and Columbia Heights well exceed that figure, Roseville and Edina have a similar proportion, and St. Louis Park and Brooklyn Park fall below it, according to the report.

But numbers don’t tell the whole story. “The vast majority” of Richfield’s affordable housing is considered naturally occurring, meaning it is affordable because it is in poor condition or obsolete in its design and amenities, the report states.

“We always try to throw the word, ‘quality,’ in front of affordable housing, so it becomes part of the vernacular,” Stark said. “You don’t say only ‘affordable housing;’ you only say ‘quality affordable housing.’

The April meeting with the Housing Justice Center was far from the first time the city of Richfield has taken action on the affordable-housing front.

During the past 25-30 years, the city of Richfield has required new multi-tenant developments to either set aside 20 percent of units for affordable housing or contribute 15 percent of their savings from tax increment financing to the HRA, according to Stark.

The city also provides rental assistance to low-income families through the Kids at Home program, aimed at keeping families in the city. “We do this better than anybody anywhere in Minnesota,” Stark said.

Plus, “we subsidize our own Section 8 program to make sure it runs correctly, which is something almost nobody else does,” he added, saying he prefers incentivizing landlords rather than regulating them.

Follow Andrew Wig on Twitter @RISunCurrent.