Regardless if it’s in a small town or a metropolis, housing continues to be a problem plaguing communities throughout Minnesota. Specifically the lack of housing, and what can be done to quickly change that.
During the Owatonna Chamber Growth Breakfast on Thursday, attendees had the chance to hear directly from Mark Foster, vice president of legislative and political affairs for Housing First Minnesota. Foster spoke directly about bills being proposed at the state legislature that aim to reduce the cost of housing development and options. Specifically, the bill — supported by the Minnesota Chamber of Commerce — will streamline the environmental permitting process, something Foster says is part of the regulatory costs that “stands out” as barriers for potential homeowners.
“This is more than just fees, it’s about mandates,” Foster said. “We are advocating for more options and trying to meet the current generation and their needs so they can get a foot in the door.”
Foster detailed the “broken” housing market, specifically in the starter home sector. He said variances that include things such as lot sizes create more barriers than solutions, and asserted that the “city-by-city approach is not going to move fast enough.”
“If we continue [the city-by-city approach] we will still be in the same situation in 30 years,” Foster said, adding the state is at a 106,000-unit deficit for housing, and is only building on average 35,000 units per year. “We need to basically throw the kitchen sink at this, and national housing experts agree.”
In Owatonna, however, city officials disagree with the bill’s “blanket approach” that essentially strips local governments from certain controls, including lot sizes and zoning. Troy Klecker, community development director for the city of Owatonna, said the bill is especially unnecessary locally, as the city ordinances are already flexible and allow for many options for home development.
“A lot of the bill is generated for the metro area — it has a bigger effect there. There are a lot of good pieces in the bill,” Klecker said. “My concerns are this blanket density increase. We work on being strategic and planning ahead, identifying what areas make sense for growth so we can keep the characters of our neighborhoods and know if they have the capacity for growth.”
One piece of the bill discusses building apartments in areas that are flagged commercial zoning, but Klecker said that is something that already happens in Owatonna thanks to the way ordinances are written and the ability the city has for variances and flexibility.
“All 12 of the apartment complexes we have built in the past eight years are in commercial zoned property,” Klecker said. “And those spaces have made sense to see an increase in density — it was all done strategically.”
Foster commented he was unaware Owatonna had already been building residential options in commercial zones, and complimented the city for being progressive in that arena.
Another area Klecker said the bill doesn’t directly impact communities like Owatonna in a positive way is that while affordable housing is always ideal, Klecker is adamant there is not an affordable housing issue in Owatonna — the major gap is in the starter or first time homebuyer market, and the bill does not have as great of an impact in that area. According to Klecker, if the city of Owatonna only focuses on the development of affordable housing and not the next level up, the new affordable housing will simply transition into being unaffordable down the road as the market continues to remain competitive because of the lack of diverse housing options.
“We have been working hard on our comprehensive plan, which asks our community how you want to see the city develop and how you want your community to grow. We take that input and make ordinance and policy changes to fit that,” Klecker said. “This bill takes away that voice that the community has in our growth. and will dictate what can and cannot happen.”
Questions from those in attendance centered largely around what the state could do to help “lessen the risk” for developers who often do not see a profit or return for many years following a housing development. Kurt Welker, of Welker Custom Homes, Inc. out of Owatonna, said the developers are currently looking at payback on developments taking up to 50 years, largely do to energy codes leading to diminishing returns.
Klecker said he would specifically like to see the state step in to help encourage condominium developments, because while they help get people on the path to homeownership, there is “too much risk” and financing is “not as attractive” because of an extensive history of lawsuits coming from associations against developers, saying improvements needed are a result of “poor construction.” Foster agreed it would be nice to see some sort of solution to this discussed on the state level, but was unsure of what possible solutions could be due to a “niche” of lawyers who represent those cases.
An area locally that is already approved, Klecker said, is a city program to help front the costs of infrastructure development around new housing development projects. He said this is something the city used to do years ago, showing developers the city itself is also invested in the project, and the program will help finance hard surface areas such as curbs, gutters and sidewalks.
“We basically want to take the same approach on our residential projects that we have been doing with economic development,” said.
The Chamber Growth Breakfast series runs from September through June on the third Thursday of the month at Torey’s Restaurant and Bar. This year’s series is sponsored by Cole’s Electric, Keen Bank and Riverland Community College.
The April event will take place at 7:30 a.m. April 18, and will feature the Riverland Community College President Kat Linaker and Chancellor of Minnesota State Colleges and Universities Scott Olson to discuss higher education.
Registration for the event is required.
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