White-Segregated Subsidized Housing Poses Fair Housing Concern

A recent report by the Institute on Metropolitan Opportunity at the University of Minnesota Law School, The Rise of White-Segregated Subsidized Housing, discusses the emergence of subsidized housing developments in predominantly white neighborhoods. The report, which focused on Minneapolis and St. Paul, suggests that these developments’ application processes, rent levels, occupancy restrictions, and marketing make then inaccessible to the lowest income and minority households.

Politically Opportune Subsidized Housing (POSH) refers to subsidized developments that receive less local political resistance because of their characteristics. Some of these characteristics restrict the housing’s availability to certain populations. POSH developments differ from conventional subsidized housing in one or more ways: They are more likely to be a conversion of an existing structure, a historic preservation, a property in post-industrial neighborhood, a development with an architectural sophistication and amenities at a scale not often found in other subsidized housing, a building with occupational restrictions for tenancy, and a project with higher development costs. The POSH developments studied in the report had an average per-unit development cost of $347,500 compared to $266,000 for the typical central city housing development in the Twin Cities.

The report examined the demographics of Low Income Housing Tax Credit (LIHTC) units in Minneapolis and St. Paul. Residents in POSH developments are more likely to be white, younger, and childless. POSH residents have higher incomes and fewer receive rental assistance than residents in other LIHTC units in poorer and more diverse neighborhoods.

In POSH developments with occupancy restricted to artists, 82% of residents were white, 3.3% of households received rental assistance, and the average income was $29,890.

The process by which tenants are chosen for POSH units and a variety of occupancy restrictions (permitted in LIHTC properties under the “Housing and Economic Recovery Act” of 2008) contribute to a lack of diversity. In a number of cases, rents were higher than the payment standard for Housing Choice vouchers, and marketing materials emphasized the buildings’ abundant amenities and common areas without mentioning the units’ price-restrictions. Awareness of these units’ availability was often through word of mouth. Housing restricted to artists tended to require an extensive application process, including an art portfolio and an interview with a screening committee, putting very low income households at a significant disadvantage. The cost of reservation fees also pose a barrier to the lowest income households.

The report concludes that POSH developments have resulted in an uneven distribution of subsidized housing tenants—with white, young, childless households overrepresented in POSH developments located in white neighborhoods, and very low income families of color are underrepresented. These developments, the report suggests, present a significant fair housing concern.

The Rise of White-Segregated Subsidized Housing is available at http://bit.ly/1OWJGwE