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MARKET UPDATE: AFFORDABLE RENTAL HOUSING IN THE TWIN CITIES | 4 AFFORDABILITY MIX, RENT LEVELS AND UNIT TYPES RENTAL AFFORDABILITY MIX WITHIN NEW PROJECTS Since 2010, most Twin Cities affordable rental developers have chosen to build projects in buildings that are 100% affordable; 86% of new units (7,639) opened in such a project, 107 buildings in all. Projects that are “predominantly affordable” – where 50% to 99% of the units have rent restrictions – accounted for 11% of new units delivered (952). Just 3% of new affordable rental units (335) were in projects with relatively few affordable units, either “mixed income” buildings (20%-49% affordable units) or “marginally affordable” projects (below 20%). This latter category typically included market-rate buildings with a handful of units for long-term homeless individuals. 100% Affordable Example The Cambric (Senior)-St. Paul (Dominium) Image: Dominium Rental Price Mix at New Affordable Rental Projects Twin Cities (7 Counties) l 2010 – 2018 Affordable Units as No. of No. of % of New % of Project Total Projects Affordable Units Supply 100% Affordable 100% 107 7,639 86% Predominantly Affordable 50% – 99% 15 952 11% Mixed Income 20% – 49% 9 233 2% Marginally Affordable Below 20% 9 102 1% Total 140 8,926 100% LEVEL OF RENT RESTRICTIONS AT NEW PROJECTS Nearly nine in ten new affordable rental units in the Twin Cities since 2010 have moderate rent restrictions, where rents target households earning 50% or 60% of the area median income (AMI), the income levels that qualify projects for federal low-income tax credit (LIHTC) equity funding. Much more difficult to obtain are project-based rent subsidies such as Section 8 funds, which enable developers to offer units to households with low- or very-low incomes. Such “deep subsidy” projects have accounted for 11% of new units since 2010, often at buildings with targeted populations. Deep Subsidy Example 66 West (At-Risk Youth)-Edina (Beacon Interfaith) Image: Urban Works Architects Rent Restrictions at New Affordable Projects Twin Cities (7 Counties) l 2010 – 2018 No. of Projects with No. of % of New Type of Restriction* Units** Supply Deep Subsidy (Section 8, 30% AMI) 55 996 11% Moderate Restriction (50% or 60% AMI) 127 7,830 89% Total 8,826 100% UNIT MIX WITHIN NEW RENTAL SUPPLY As with market-rate projects, the vast majority of units at affordable rental projects (non-senior) come in one- and two-bedroom layouts; 37% and 30%, respectively. Studio units, accounting for 19% of the new non-senior affordable supply, are the norm at projects with targeted populations, especially those targeted to veterans or youth. Larger units for families with children, including three- and four+-bedroom units, comprise about 14% of all new affordable units in the Twin Cities. Nearly 95% of the larger units (745) offer three-bedrooms, while only 5% of the supply (36 units) offers four or more bedrooms. The lack of four+-bedroom layouts illustrates the difficulty of financing affordable housing for larger families. Unit Mix of New Affordable Units (Non-Senior) Twin Cities (7 Counties) l 2010 – 2018 No. of Projects No. of Units % of New with Layout* in Layout** Supply Studio Units 43 1,080 19% One-Bedroom Units 75 2,090 37% Two-Bedroom Units 79 1,710 30% Three-Bedroom Units 55 745 13% Four-Bedroom+ Units 7 36 1% Total 5,661 100% * Note: Many buildings have both types of rent restrictions (deep subsidy and moderate). ** Subsidy level missing for 100 of 8,926 units in full survey. * Denotes the number of buildings that have the given unit type. Most buildings offer several types of units. ** Layout type missing for 112 of 5,773 non-senior units in full survey.