By Isaac Russell Director of Policy

Across the country, many states and municipalities are facing critical housing challenges—shortages of affordable housing can lead to crises for low-income renters, which also means that potential first-time homeowners are priced out of the market.

In Minnesota, these pains are felt acutely and disproportionately by Indigenous people and people of color. The Center’s Indicators for an Inclusive Regional Economy show racial homeownership gaps persist, even among households with similar incomes. This suggests that Black, Indigenous, Latine, and Asian families face additional burdens to homeownership beyond earned income. Among families earning between $50,000 to $100,000 annually, only 41% of Black households own their homes compared to 72% of White households. These racial disparities also exist among low-income renters. Low-income Korean American, White, and Black households are hit hardest, with more than 3 in 5 renters in these communities being disproportionately rent-burdened.

Dedicated Affordable Housing Dollars: A Constitutional Approach

To find solutions, policymakers and industry groups are looking for statewide solutions to address these housing crises. One innovative solution to move the needle is a proposal for a constitutional amendment that would dedicate revenue to the construction of affordable housing, rental assistance, and homeownership.

While this solution alone will not solve racial inequities in housing, it does address one of the foundational problems, which is a shortage of affordable housing. If we define affordable housing as 30 percent of area median income, the metro area is short approximately 71,491 units. To build a single unit of affordable housing, including years-long subsidization of the unit, costs approximately $300,000. This comes out to an over $21 billion price tag to build these units. According to the Minnesota Housing Partnership, our state is short approximately 103,600 units with a price tag of $31 billion.

Accessible Homeownership Builds Inclusive Regional Economies

Across Minnesota, this crisis extends to families that wish to purchase a home. It is estimated that 27,000 families can afford homeownership but continue to rent due to the lack of available housing stock within their price range. To facilitate more home ownership among underrepresented communities, we must address stagnant funding to programs designed to help construct new housing. These include programs such as the HOME Investment Partnership Program and the Community Development Block Grant Program, which have helped to compound multi-year housing shortages. The urgency for such investments can be seen in the Metropolitan Council’s projections, which show the region will gain 367,000 new households by 2040. That means we will need nearly 13,000 new housing units of all types. The region has produced less than this number per year for the past decade! An inclusive economy makes the stability and wealth-building benefits of homeownership accessible to all households, regardless of their race or ethnicity.

Systemic Solutions for Systemic Problems

All of this goes to the heart of why the Center supports a constitutional amendment that dedicates three-eighths of a percent sales tax to the building of affordable housing, makes financial resources available for homeownership, and provides support for housing stability. Modeled after our very successful Legacy Amendment, this initiative creates three advisory committees that will provide recommendations for lawmakers when they decide how they will allocate resources.

To make this happen, we need legislation that authorizes a referendum for voters. This referendum will require support from a wide array of stakeholders to let the public know of this initiative and also a show of support from constituents.

We know this one amendment will not solve all our housing challenges, but it is one of the tools in the toolbox that will build the homes Minnesotans need.

Learn more about the amendment
Contact your legislator, let them know what you think
Explore the Indicators for an Inclusive Regional Economy
Read Our 2023 Policy Priorities

By Suzanne P. Kelly, Chief of Staff

Home ownership not only establishes a sense of place, community, and stability but multiple studies show it has been the most effective intergenerational wealth building strategy Americans have known.

Yet 2023 research published by the California Housing Finance Authority, suggests that discriminatory housing practices such as redlining, racial covenants, and predatory lending has disproportionately kept Black families from owning homes at the same rate as their white peers.

In Minnesota, 77.5 percent of whites own their own home, compared to just 30.5 percent of Blacks; the 5th worst homeownership gap in the United States. Not surprisingly, that gap corresponds to an equally abysmal wealth gap among Black and White Minnesotans.

One need only look to St. Paul for a relevant example of legally sanctioned government actions that resulted in disproportionate harm to Black residents.

From 1956 to 1968, local and state leaders seized by eminent domain, land upon which hundreds of Black-owned homes, and businesses in St. Paul’s Rondo neighborhood sat, in order to construct a new interstate corridor. At the time nearly 80 percent of St. Paul’s Black residents lived in the Rondo neighborhood.

Björgvin Sævarsson, founder and CEO of the Yorth Group, reports that “over 700 homes were lost to I-94. Along the way, the ecosystem for the previously thriving local [Black] economy was destroyed with many businesses closing as a result.”

Sævarsson determined that the intentional routing of I-94 through the heart of Rondo resulted in a loss of at least $157 million by 2018 in intergenerational wealth being passed down from homeowners to their children and grandchildren.

Rondo is just one local example of legally sanctioned, post-slavery actions taken across the United States that have left a legacy of Black exclusion educationally, socially and economically.

Efforts to repay Black Americans for their decades of loss have rarely gained traction. But on January 4, 2023, the Saint Paul City Council voted to establish the Saint Paul Recovery Act Community Reparations Commission. 

The ordinance, which takes effect on February 13, 2023, establishes a commission that will recommend ways for the city to make reparations to Black residents whose ancestors were enslaved.

The vote came two years after the City apologized, for its role in “systemic discrimination […] perpetrated through redlining and racial covenants, access to housing, environmental injustice and the removal of St. Paul’s Rondo neighborhood (Gray, 2023).”

These efforts also follow the adoption of the 2021 Ramsey County Inclusive Economic Competitiveness & Inclusion Plan, which endorsed significant local and county housing investments and acknowledged the historic policies that extracted wealth from Black families, necessitating courageous policies to catalyze systemic equity building.

The Center commends the actions of policymakers to address the wealth, unity, and community taken from the residents of the Rondo community. The multi-generational effects of the United States highway system on Black communities can truly never be measured, but our actions to repair the harms must begin now.

Learn more about the Center for Economic Inclusion’s work with Ramsey County, the City of Saint Paul and others to disrupt and dismantle systemic racism and bias to construct and sustain an inclusive, equitable and growing regional economy for all here
Learn more about the Saint Paul Recovery Act Community Reparations Commission here.

Statewide Housing Amendment: An Innovative Solution to Close Racial Homeownership Gaps

Center Applauds City of Saint Paul Actions to Address Historic Legacy of Wealth Extraction