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HomeMy WebLinkAbout1976 01-13 HCMCall to Order Roll Call Approval of Minutes 12 -10 -75 Introduction of Guest Speaker Presentation by Michael Gleeson MINUTES OF THE PROCEEDINGS OF THE HOUSING COMMISSION OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JANUARY 13, 1976 CITY HALL The Brooklyn Center Housing Commission met in regular session and was called to order by Chairman Howard at 7 :35 p.m. Chairman Howard, Commissioners Plummer, Ward, Beikler, Magnuson, Weitzel, Hastings and Kohrt. Also present were Mayor Philip Cohen, Councilman Bill Fignar, Director of Planning and Inspection Blair Tremere and Administrative Assistant Ron Warren. Motion by Commissioner Weitzel and seconded by Commissioner Plummer to approve the minutes of the December 10, 1975 meeting as submitted. The motion passed unanimously. Chairman Howard then proceeded to introduce Mr. Michael Gleeson, Assistant Professor in the School of Public Affairs at the University of Minnesota. Chairman Howard briefly reviewed topics of previous speakers, Rollie Comstock and Mayor Al Hofstede, and noted that Mr. Gleeson's presentation may differ somewhat from the views expressed by these speakers. Chairman Howard stated that Mr. Gleeson is a well known authority on housing problems, and has appeared before the legislature to present his views on housing. Commissioner Haroldson arrived at 7 :40 p.m. Mr. Gleeson began his presentation by thanking the Commission for extending him an invitation to address the Commission, and stated that he is very interested in local housing affairs and the workings of groups established to assist in the solving of housing problems. He noted that his presentation was to cover two topics: first, housing distribution and costs, and second, the making of housing policy at the local level. He stated that recently the federal government has pulled back from many of its housing programs with the state stepping in to fill the void. He noted that in many cases the states have done this with little or no coordination and suggested that it may very well be that now local officials will have to develop policies and programs of their own to coordinate the housing effort. Mr. Gleeson reported that much has been made of recent statistical data which claims that 85% of the people in the metro politan area cannot afford an average new single family home, and that 50% of the people renting cannot afford the rent of newly developed apartments. He stated that he does not quarrel with these statistics, but they may be an over simplication and somewhat mis- leading. He further stated that these figures, to be more useful, should reflect all housing in the metro area, not just the new housing. Most people, he noted, live in old housing. Next, Mr. Gleeson referred to a handout that was presented to the Commission that pertains to the distribution of reported residential sales and household incomes. He stated that the figures in the handout include both new and used homes and their sale prices for the years 1970, 1971, and 1972 and a separate set of figures for after 1972. Based on the residential sales and household incomes shown, he concluded that most people can find single family residential housing in their salary range. He noted that his conclusions are not as bleak as some other projections, but he warned that his data refers only to monthly costs of paying for a home, not what it costs to initially get into a home. He stated that there is no data on this particular subject and that the cost of getting into a home is a major problem, especially for younger families. Gleeson also noted that his figures indicate that since 1972 the percentage of people able to afford housing has gone down. He further noted that housing costs have gone up faster than family income in the aggregate. Mr. Gleeson again referred to the statement that 50% of the renters in the metropolitan area cannot afford the average rent of new apartment units. He stated that this might not be as bleak a state- ment as it appears on the surface. He further stated that if 50% cannot afford new apartment units than apparently the other 50% can. He noted that many of those who cannot afford the new rental units can afford older apartment units. Gleeson then explained that these figures, and the statements relating to them, tend to hide the plight sf the poor, who pay more than 25% of their small incomes on housing. 1 -13 -76 -2- Gleeson went on to report that the figures he had been discussing are only a part of a number of components that make up total housing costs. He stated that there are basically three major cate- gories of total housing costs: 1. shelter; 2. fuel and utilities; 3. household furnishings and operations. He explained that within the first category, shelter, is the cost of home ownership which includes the purchase price, mortgage interest payment, maintenance and repairs, property taxes, and property insurance. He stated that once a person purchases a home for an established purchase price and obtains financing, the first two components (purchase price and mortgage interest payment) generally do not change and are a fixed amount. The other components making up the cost of home ownership, such as maintenance and repairs, property taxes and property insurance will fluctuate and have a tremendous effect on those owning a home that are on fixed incomes. Gleeson also explained the components that make up a purchase price for people seeking to buy a new home, such as site costs, construction costs, financing, marketing, etc. He stated that increases in these costs presently affect the rise in the cost of purchasing a new home but do not affect those already have a home. Again he reiterated that prior to 1973 family income was rising along with the rising cost of housing, but after 1973 the overall cost of housing increased faster than family income. He reported that certain other components, such as the costs of fuel and utilities increased tremendously and had a significant effect on the rising cost of housing. He further reported that household furnishings also rose faster than income. Gleeson stated that in one area, the cost of rent, the component did not increase more than the increase in income. Gleeson summarized the first part of his presen- tation with the following three statements: 1. Through 1972 a substantial number of people could afford their own home, family income was keeping up with the rising cost of housing and rent. The exceptions to this statement were the poor, the elderly on fixed income, and young families with small but rising incomes who could not afford the original invest- ment to get into a home. 2. Since 1973 fuel, utilities, construc- tion costs and land costs went up faster than family income making it difficult for more people to purchase a home, although still a substantial number of people can afford to purchase a home. Rents did not increase faster than family incomes. 3. The various components affecting housing costs, affect different groups of people in different ways making housing problems very complex. Following the conclusion on the first part of Mr. Gleeson's presentation, there was a question and answer session. Commissioner Haroldson asked if rent subsidies were a component that had an effect on housing costs. Mr. Gleeson responded by stating that he felt that subsidies did not affect housing costs, at least in an appreciable manner. Director of Planning and Inspection Blair Tremere noted that Mr. Gleeson had not made reference to subdivision regulations, building codes or required lot sizes as major components in housing costs. He questioned whether or not these factors have a significant, or slight, effect on housing costs. Mr. Gleeson responded by stating that these factors are not explicitly included, although he does feel they have an effect on housing costs. He further stated that he does not know to what extent they effect housing costs because there is no reliable data on these factors. He cited two examples one in Bloomington, where lot size requirements were reduced with the City feeling that this action had a positive effect on reducing aggregate housing costs; the other example was in Brooklyn Park, where the City experimented with these factors and their conclusion was that it had no effect whatsoever on reducing aggregate costs of housing. 1-13 -76 -4- Continued Presentation by Michael Gleeson Mayor Cohen questioned the guest speaker as to housing unit needs. He noted that there are conflicting statistics as to the number of housing units needed in the metropolitan area, some sources say 23,000 are needed while others say as few as 7,000 are needed. Mr. Gleeson responded by stating that needs analysis is not precise because it relies on abstract notions of previous trends and projec- tions. He further stated that the point to be derived from these figures is that there will be significant changes in housing formations in the coming years and we must be prepared to meet these changes or change our life styles. Mr. Gleeson commented that the public sector is going to have to make difficult policy choices and establish priorities due to the many pos- sibilities and problems to be met. He further commented that he felt the local level of govern- ment should coordinate the policy decisions and priorities. Recess The Brooklyn Center Housing Commission recessed at 8 :45 p.m. and resumed at 9 :05 p.m. Mr. Gleeson next discussed the making of housing policy at the local level. He referred to an outline, distributed to the Commission, relating to federal, state and local programs. He noted that none of these programs have been put together and coordinated in such a way as to maximize the available programs and policies. Gleeson stated that it may be impossible to ever coordinate these programs so that they can be used effectively due to various regulations and constraints. He further stated that if coordi- nation of these programs ever does take place, it would best be done at the local level© He went on to briefly discuss some of the various federal, state and local programs available. He noted the Section 8, Housing Assistance Payments Program, under which low and moderate income families pay 15% to 25% of their income for rental units with a subsidy being paid to make up the difference between what is paid by the individual and what is the "fair market rent" of the unit. He mentioned the home ownership loan program, available through the Minnesota Housing Finance Agency, where eligible Minnesota residents may obtain FHA or VA home mortgages from partici- pating mortgage lending institutions at below market interest rates. He also briefly mentioned the home improvement loan program, available through the Minnesota Housing Finance Agency, where eligible Minnesota residents may obtain FHA Title I Home Improve ment Loans from participating lending institutions at below market interest rates Gleeson briefly discussed the use of tax incen- tives as to how they can affect housing programs. He mentioned the Berglund Bill that was passed during the 1975 session of the Minnesota Legisla- ture which has the effect of denying depreciation write -offs for properties in violation of mainte- nance codes. He stated that this law can be a very strong lever to gain compliance to maintenance codes and ordinances. Chairman Howard questioned Mr. Gleeson as to what we, as a local housing commission, can do regarding some of these housing problems. Gleeson responded by noting that the City has adopted a Housing Maintenance Ordinance which is a start. He further noted that enforcement of and compliance to provisions of the Ordinance at an early date is essential. He briefly commented on the history of housing maintenance codes and stated that to be successful these codes must be enacted at the right time (prior to when maintenance of existing housing is possible); the society should be homogeneous and accept the ordinance; and the ordinance must be enforced immediately. He noted that a common failure of many housing maintenance ordinances is that they were not enforced until it was too late, He concluded his remarks by noting that he felt the City of Brooklyn Center adopted its code at the proper time, that the community seems to be homogeneous enough to accept the ordinance, and that the thing to be concerned about now, to make the ordinance successful, is to adequately enforce it which is no easy thing to do, 1 Mayoral Appointments to Housing Commission Mayor Cohen's Report Adjournment Following the presentation there was another brief question and answer session. Following the question and answer session, Chairman Howard thanked the guest speaker for his excellent presentation. The secretary noted that the Mayor at the January 12, 1976 City Council meeting had appointed, and the Council confirmed, Dolores Hastings, representing the southeast neighborhood, Patricia Weitzel, representing the west central neighborhood, and James Kohrt, representing the southwest neighborhood, to the Housing Commission for three year terms effective January 1, 1976. Chairman Howard recognized Mayor Philip Cohen who reported on possible housing programs that will be coming before the Housing Commission in the near future for its reveiw and input. He noted that presently the HRA has accumulated approximately $70,000 to be used for housing programs. The Mayor stated that this money may possibly be used in a combination of ways such as writing down loans for housing improvement and rehabilitation and also for rent supplements. He further stated that the City Manager and staff will be researching the possibility of the City becoming involved in the Metro HRA Rent Assistance Program and that this will be presented to the City Council and the Housing Commission within the near future. Mayor Cohen concluded his remarks by stating that these are some of the directions the City is anticipating taking regarding housing programs. He commended the Commission for its excellent work in the past and expressed his opinion that he was sure this fine effort would continue. Motion by Commissioner Hastings and seconded by Commissioner Plummer to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Housing Commission adjourned at 10:30 p.m. Chairman