Rental Housing work group members at design sprint. Credit: Awa Mally
The GroundBreak Coalition exists to create a Minneapolis-St. Paul (MSP) region that is dramatically more inclusive, racially just, and climate-ready by expanding access to capital. On October 31st, GroundBreak announced nearly $1 billion in capital commitments to build Black wealth and close the racial wealth gap in MSP for good, as part of a 10-year plan to change how money flows in our region. We are proud of this initial down payment and there is significant work ahead.
To achieve change at the scale our region needs, GroundBreak’s strategy has focused on leveraging flexible capital to unlock plentiful private-market dollars toward wealth-building activities. For most of GroundBreak’s focus areas, the breakthrough to achieve this vision was evident, and a relatively clear path forward emerged.
A key area where we have more work to do, as a coalition and as a state, is in addressing the affordable housing crisis.
Where we live determines everything, and stable housing underpins every other wealth-building activity. However, for too many MSP residents, particularly families earning less than 40% of area median income (AMI), there is an acute shortage of rental housing that is affordable.
Where we’ve been
In the summer of 2022, GroundBreak’s rental housing work group researched how private-market capital could be leveraged toward deeply affordable rental housing, particularly for households with incomes at or below 40% of AMI (about $55,000 per year for a family of four). This parameter came into tension with GroundBreak’s focus on unlocking private market capital to close racial wealth gaps. Ultimately, the work group did not identify financial tools or products that could be financed through private-market lending, given that developing affordable housing for households earning under 40% of AMI requires deep subsidy. When rental housing is deeply subsidized, property owners do not have the revenue from tenants to pay the debt on private-market loans. Given the mismatch between GroundBreak’s strategy for change and the capital that is required for deeply affordable rental housing development, GroundBreak’s efforts in rental housing stalled.
Where we are now
As the year closes, coalition members recognize the urgent challenges facing affordable housing providers who are struggling to keep up with significantly elevated operating expenses while navigating flat or declining revenues. Preserving affordable housing for families in our community is paramount. Even as GroundBreak prepares to revisit our rental housing strategy within our planned implementation teams, there are distinct, but related, efforts working to identify strategies that can buoy these properties and help to preserve their affordability for the long term. While these are separate from GroundBreak’s rental housing work, they feature the leadership of many coalition members who are in close communication with the GroundBreak team. We encourage coalition members to stay abreast of them and we are keeping an eye out for GroundBreak aligned investment opportunities (for more information, please contact Chad Schwitters: firstname.lastname@example.org). Furthermore, we are encouraged by efforts to invigorate the State Housing Tax Credit Program and Contribution Fund, as well as a 2023 legislative session that committed $1 billion in state funds toward affordable housing, an investment that happened because of the advocacy of many individuals and groups in GroundBreak.
Where we’re going
GroundBreak is in close conversation and alignment with coalition members who are advancing strategies to preserve and increase the supply of affordable rental housing through new private and public resources and other sources of capital. Going into 2024, GroundBreak is refining its governance and operations structure to implement the next phase of its work. This will include launching implementation teams later in 2024. We are committed to developing a participatory and transparent process for revisiting our rental housing goals and strategies and expect coalition partners, whether through GroundBreak or other strategic alignments, will continue working together to address the urgent need to preserve and develop affordable housing. Identifying long-term and permanent breakthroughs in this area is critical for our region, and GroundBreak’s vision of a future where every resident, no matter their race or background, has the opportunity to build wealth and achieve their aspirations in MSP.
We will continue to provide updates through our blog and newsletter. As always, we welcome your thoughts, ideas, and questions: email@example.com.