The United States Department of Housing and Urban Development (HUD) defines affordable housing as that which consumes 30 percent or less of a household’s gross income, and families who pay more than this amount are considered “cost burdened.” Affordable housing is a pressing need on the national scale:

• For every 100 very low-income households nationally, there are less than 68 affordable, available, and adequate rental housing units.
• For every 100 extremely low-income households, there are less than 36.

There are 4,166 renters in Rice County, and many face significant barriers to finding affordable housing:

• The Fair Market Rent (FMR) for a two-bedroom apartment in Minnesota is $764.  A household must earn $30,551 annually in order to afford this level of rent without paying more than 30 percent of their income on housing.  Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into an hourly Housing Wage of $14.69. 
  
  • A minimum wage worker earns an hourly wage of only $6.55.
  • The mean wage for a renter in Rice County in 2008 was just $9.57.
• In Rice County 62 percent of renter and 54 percent of homeowner households making less than $19,999 are cost burdened.
• Minnesota experienced the fastest increase of extremely cost burdened households, those who spend over half their income on housing, of any state in the nation from 2000-2006 (MN Housing Partnership 2008).
• In Rice County, 11 percent of renter households are extremely cost burdened (MN Housing Partnership 2008).

To address the affordable housing need, Rice County has three main types of housing programs:  homeownership, rental, and public housing programs.

Homeownership programs

Three Rivers, the Northfield and Faribault HRAs, and USDA Rural Development all administer homeownership programs that provide financial assistance to home-buyers.   These programs include:

• Emerging Markets (Three Rivers): Down payment  assistance and financial literacy classes through a community-oriented approach to homeownership.
• Housing Assistance (Northfield HRA): First-time homebuyers participate in a homebuyer education course and receive up to $5,000 toward down payment or closing costs on either “traditional” or manufactured home.
• Manufactured Home Acquisition (Northfield HRA): Supplies $5,000 toward purchase of new manufactured home or down payment on “traditional” home if current housing does not meet standards.
• Minnesota Urban and Rural Homesteading (Faribault HRA): Provides a contract for deed with no down payment for residents who have lived in Faribault for at least one year.
• Single-Family Housing Direct Loans (USDA Rural Development): Provides down payment assistance to individuals with income below 80% of the area median income.  Loans may meet total property value with fixed interest rates and available subsidies.

The Cannon River Land Trust (CRLT) also provides home-ownership options.  The organization builds and sells homes in Northfield, but continues to own the land, which is leased to participants for 99 years.  Program participants may resell the house, but the land lease requires that they only capture 30 percent of the increased value of the home in resale, which keeps the CRLT homes affordable.  Since its inception in October of 2001, the non-profit organization has built 19 affordable single-family and twin homes.

The economic downturn has deeply affected the land trust, and as a result the CRLT is looking to reevaluate their model to ascertain its sustainability in the current housing market.  Two to three of the homes are currently in foreclosure.  When foreclosed, the CRLT has the opportunity to buy back the house, but if they do not, foreclosure rules dictate that the home is sold on the open market, so the affordability restrictions are removed from the land lease.  The current housing market has lowered home prices outside of the trust, making the open market a competitive alternative to the trust’s homes.

Habitat for Humanity (HFH) is a “nonprofit, ecumenical Christian housing ministry.”  Since 1993, the Rice County HFH branch has built a total of 16 homes located in Northfield, Faribault, Dundas, and Nerstrand.  This organization serves families who meet three requirements:

1. Need: they must be cost burdened or living in substandard housing. 
2. Able to pay: mortgage payments average $400-$500 a month on over a 25-30 year period. 
3. Willing to partner with HFH by providing 350 hours of labor on the home in “sweat equity” and acting as a spokesperson for HFH during the year in which the house is built.

The effects of the economic recession have been felt primarily in a decrease in charitable donations from businesses.  Many of HFH’s clients cannot buy homes on the market due to credit and bankruptcy, so the low market prices did not affect this organization as it did the CRLT. While they have not seen an increase in applicants, they are currently processing applications for 2010 and it is still too early in the process to know how the numbers will compare with the past.  HFH will not cut the number of houses they build in the immediate future, but because of the economic uncertainty, they may not increase as they have in the past.

Rental Programs

• Section Eight housing vouchers:  Administered by the Rice County HRA, HUD-funded.
  
  • Serves families with income below 50 percent of the median family income for the area, $34,450 for Rice County.  Preference is given to families with incomes below 30 percent of the median income limit, $20,670 for family of four in Rice County.
  • Eligible families pay 30 percent of their income towards rent, and an HRA voucher covers any additional cost so long as the total is below 110 percent of the FMR.
  • Rice County only has 329 vouchers available, and no new vouchers have been issued since August. 
  • Because of the high demand, there is always a waitlist for these vouchers, but a combination of word-of-mouth advertising from participants and the hard economic times has put added stress on the program. 
  • The waitlist is currently closed, but the county plans to purge it soon, and families currently on the waitlist will have to reapply.

• Section 521 Rental Assistance Program: Administered by USDA Rural Development. 
  
  • Assistance to low-income, elderly, and disabled residents.
  • Residents pay 30 percent of their income on housing in a qualifying private-market multifamily housing project, of which there are eight in Faribault and six in Northfield.

Public Housing

• Robinwood Manor Apartments: Owned and administered by the Faribault HRA.
  
  • Subsidized housing for handicapped, disabled, and elderly residents under 80 percent of the Rice County Area Median Income.
  • Residents pay 30 percent of their income in rent for one or two bedroom apartments, and the complex includes 51 apartments.
  • Because of the targeted nature of the program, the HRA did not see an increase in applications for this program due to the economic downturn; however, they maintain steady demand and in 2008 the waiting list had a total of 45 applicants, of which 39 were taken off the list because they either received a unit, failed to respond to a request for information, or became ineligible.

• 49 scattered site public housing rental units with 2 to 4 bedrooms: Owned and administered by the Faribault HRA.
  • Available to low-income families in Faribault, subsidized through HUD.
  • There has been a consistent waitlist for 2 to 4 bedroom homes, but the economic situation has increased the need even further.  In 2008, the public housing waiting list had a total 265 applicants, of whom 88 were taken off the list because they were issued a unit, failed to respond to requests for information, or were determined to be ineligible.

• Northern Oaks, an eight-unit rental townhouse: Built by Three Rivers. 
  
  • Three Rivers built the complex in 1997 to provide affordable housing to the city of Northfield. 
  • It has maintained a waitlist since its inception.

Mixed-income housing

• Maple Hills Development is a mixed-income neighborhood in Northfield.  It was a collaborative effort of the Northfield Housing and Redevelopment Authority (HRA), Cannon River Community Land Trust (CRLT), Three Rivers Community Action, Inc., Habitat for Humanity (HFH), and the Northfield Community Action Center.  The neighborhood is located on 10 acres of land owned by the Northfield HRA and includes 39 units of housing, including 14 CRLT homes, 2 HFH homes, 16 market rate homes, and 7 affordable rental units.
• South Bridge Development, planned by Three Rivers and the Northfield HRA, which will be an environmentally friendly and healthy mixed-income neighborhood in southeast Northfield.  The Northfield HRA bought the 14.4 acres of land on which the development will be built using funds from the Greater Minnesota Housing Fund and the Blue Cross Blue Shield Foundation.  The neighborhood will utilize a “green development plan” that considers environmentally friendly site location, compact development, energy efficient homes, green certified materials.  It also creates a healthy community through healthy materials in homes and through sidewalks and pathways, which create a walkable neighborhood.  This project has been put on hold due to the changing housing market.  With the rise in foreclosures, Three Rivers is shifting its focus from construction to rehabilitation of homes.  However, because the funds are already allocated and the Northfield HRA owns the land, they expect to continue the project in the near future.  This temporary shift in focus reveals the relative flexibility of Three Rivers as well as how the current economic situation has impacted the goals and projects of the organization.