271,000 Minnesota households pay more than 30% of their income in rent

Lawmakers propose giving every Minnesotan who needs it a rental voucher. We would be first in the nation to do it.

apartment building
An apartment building in St. Paul, Minnesota in February 2020. Photo by Max Nesterak/Minnesota Reformer

Just one in four households that are eligible for rental assistance actually get it.

When the state’s three largest housing agencies opened up their waiting lists for Section 8 Housing Choice Vouchers last summer, they received more than 45,000 applications for just 7,500 spots. That was for a spot on the waiting list, not for an actual voucher.

Minnesota State Sen. Kari Dzeidzic, DFL-Minneapolis, and Representative Mike Howard, DFL-Richfield, plan to introduce legislation when lawmakers reconvene Feb. 11 that would provide a rental subsidy to every single person who qualifies. That’s any household earning less than 50% of the area median income, or about $45,000 a year for the typical three-person household in the Twin Cities metro.

“We can’t afford to just continue nibbling around the edges, we need to transform how we fund stability for Minnesotans, and that means making housing a larger priority,” Howard said.

The proposal would help an estimated 550,000 Minnesotans pay no more than 30 percent of their income on rent. The cost to the state? An estimated $1.5 billion per year, a figure that would need to climb year-over-year to keep pace with rising rents.

Beacon Interfaith Housing Collaborative, a non-profit developer of housing for extremely low-income people, is trying to organize grassroots energy for the legislative effort under the name “Bring It Home, Minnesota.”

“We need to start to talk about a solution that’s at the same scale of the problem.” said Lee Blons, president of Beacon Interfaith Housing Collaborative. “Rent subsidy is a solution. We know it works, and we just need to provide the investment necessary to reach everybody.”

Federal funding for rental assistance has stagnated along with wages in recent years, while rents have exploded. Since 2000, the median rent in Minnesota has increased 13% above inflation. The median renter income has not kept up, decreasing 5% during that same period, according to analysis by the Minnesota Housing Partnership.

A growing share of renters are deemed “cost burdened,” meaning they spend more than 30% of their household income on rent. Today, that describes 44% of Minnesota’s renters, or about 271,000 households.

The picture is particularly bleak for low-income households in the Twin Cities, who on average are paying 50%-75% of their income on rent.

Rental assistance keeps families from spending more than 30% of their income on rent. The average Section 8 subsidy in the Twin Cities metro is about $780, according to data from the Metropolitan Council.

It’s enough to stave off eviction. According to a study from the Eviction Lab, in half of all evictions, renters were behind by less than $700.

Local governments are increasingly trying to fill the gap in federal funding. The state provides rental subsidies to about 20,000 seniors, people with disabilities and people who have experienced long-term homelessness through a program called Housing Support. The City of Minneapolis is piloting its own rental assistance program for about 300 families with children called Stable Homes Stable Schools. The city of St. Paul announced a similar program just this week.

This year, Governor Tim Walz is proposing a record-setting $276 million in bonds to support affordable housing projects.

“The governor and I believe that every person, without exception, deserves a safe, affordable and dignified place to call home,” said Lt. Governor Peggy Flanagan at a recent event at the Federal Reserve Bank of Minneapolis. Her mother relied on a Section 8 Housing Voucher when Flanagan was a child. “Housing is a fundamental building block to strong people, strong communities, a strong economy.”

Democrats and urban progressives aren’t the only ones looking for affordable housing money. Businesses in Greater Minnesota say the lack of housing across the state is stalling economic growth.Republicans supported funding for workforce housing, homeownership programs and homelessness prevention in the last budget bill.

Which means there could be another deal.

Due to the state’s current budget outlook, however, a major package like the one proposed by Dziedzic and Howard is unlikely.

Funding for housing makes up less than one percent of the state’s annual budget. Providing a rental subsidy to everyone who needs one would raise the share of the state’s spending on housing to about 4%. No other state guarantees rental subsidies and few, if any, have seriously considered such a proposal.

But Howard says providing tax credits to build affordable housing is not enough.

“When you look at the scope and the scale of our affordable housing crisis, we know that we can’t build our way out of this crisis,” Howard said. The cost of building has outpaced wages, so that today it’s difficult to build new housing that’s affordable for people making average incomes.

“I would argue that it’s a cost effective solution, because with home stability, I think we’re going to see other benefits down the road,” Howard said.