As the region struggles to deal with its shortage of affordable workforce housing, a newly elected Minnesota senator with a background in real estate is proposing a fairly simple, yet logical solution.
Instead of investing more money in new construction, Sen. Zach Duckworth has proposed creating a new program to rehabilitate older homes. Even though much of the Lakeville Republican’s district covers Dakota County, all dollars would go to projects outside the seven-county metro. The program would be administered through the Minnesota Housing Financial Agency, with communities applying for grants on a competitive basis. No community could apply for more than $200,000, or more than $50,000 for a single housing unit.
As a real estate agent working during the foreclosure crisis, Duckworth said it was commonplace to see quality homes fall by the wayside. Now, the region is grappling with an extreme shortage of housing inventory at all levels of the market.
In terms of both cost and expense, Duckworth said it’s often much cheaper to repair a quality older home and get it back on the market than to build a new home from the ground up — particularly as building material prices continue to soar amid strong demand.
Faribault Community Development Director Kim Clausen said the program could make a lot of sense for Faribault, a city with a lot of older housing stock and a housing shortage. The city’s Housing and Redevelopment Authority has explored fixing up several homes that have fallen into its lap, including at 1116 Second St., but it expressed concerns about the overall costs of that property and risks compared to starting over from scratch.
Owatonna real estate broker Matt Gillard said that he would support providing more funding for the city to help fix up neglected homes. He noted that several recent projects have been met with significant success and praised city staff for its “forward-looking approach.”
“I think that the city of Owatonna has done a really good job with identifying these problem houses and securing them,” he said. “There are still some older buildings that have been neglected, and we do need money for that.”
The House companion of Duckworth’s bill, sponsored by Rep. Tama Theis of St. Cloud, was heard in the Housing Finance and Policy Committee in mid-March. Even though Theis and Duckworth are both Republicans, the bill appeared to be well received by the DFL.
Scott McMahon was among those who testified on the bill’s behalf. As Executive Director of the Greater Minnesota Partnership, McMahon represents businesses, chambers of commerce, economic development authorities, cities and nonprofits across greater Minnesota.
McMahon believes that if approved the program would be well worth the investment, making a “really significant” impact on the market. Currently, he said that many greater Minnesota cities don’t have the resources needed to fix up deteriorating old homes.
Attracting new housing developments is also a challenge, given that property values often haven’t kept up with construction costs. Yet without dollars to get older houses back on the market, those houses often deteriorate and are eventually torn down.
The legislation isn’t expected to be passed as a standalone bill, but was included for consideration in a possible omnibus bill. Duckworth’s bill would provide $5 million in funding for the program, but he’s hoping to get as much funding for it as possible.
Rice County Habitat for Humanity Director Dana Norvold said that the initiative is much in line with Habitat’s Aging in Place initiative, which is designed to help the 19 million older Americans who live in homes that are in disrepair or inadequate for their needs, according to the AARP.
Norvold said that many seniors on fixed or limited incomes struggle to afford repairs. Through “Aging in Place,” Habitat volunteers provide personalized solutions to help seniors to stay in their home for as long as possible while keeping the home livable for generations to come.
"Oftentimes, you have people who were able to afford to buy the home 40 years ago but can’t fix up the home now,” she said.