Proactive Policy Promotes Affordable Housing in Bloomington, Minnesota

Home > Case Studies > Proactive Policy Promotes Affordable Housing in Bloomington, Minnesota

 

Proactive Policy Promotes Affordable Housing in Bloomington, Minnesota

 

Proactive Policy Helps Preserve and Create Affordable Housing in Bloomington, Minnesota

Bloomington, Minnesota, a Twin Cities suburb and home to the Mall of America, can also claim the distinction of having the highest number of naturally occurring affordable housing units of all the suburban communities in Hennepin County. As a result of proactive policymaking from local leaders and the experience of area affordable housing developer Aeon, which has created or preserved more than 5,800 affordable apartments in the Minneapolis-St. Paul area, a pair of projects is helping ensure that the city retains its broad affordability and accessibility to families across income levels. The projects, Blooming Meadows South and Blooming Meadows North, preserved 306 units of naturally occurring affordable housing and created 172 units of new subsidized affordable housing, respectively. In recognition of Aeon’s achievement, the Urban Land Institute awarded Blooming Meadows the inaugural 2022 Terwilliger Center Award for Innovation in Attainable Housing.

Revitalizing and Preserving Affordability at Blooming Meadows South

In 2019, with the help of the city, Aeon acquired Village Club Apartments, a complex consisting of 306 units of naturally occurring affordable housing that the developer would eventually transform into Blooming Meadows South. Built in 1969 and last renovated in 2006, the units needed investment and rehabilitation, says Eric Anthony Johnson, president and chief executive officer of Aeon. The undermaintained state of the apartments contributed to their affordability, with units generally affordable to households earning between 30 and 60 percent of the area median income (AMI). When the site went on the market, significant interest from institutional investors, who may have raised rents, as well as from developers interested in completely redeveloping the site caught the attention of Bloomington officials, who had adopted policies aimed at preserving the city’s naturally occurring affordable housing. To that end, the city loaned $7 million to Aeon to help the developer assemble a competitive bid for the property with the aim of rehabilitating the units and preserving their long-term affordability through a formal agreement with the city. Units in the newly renovated Blooming Meadows South now rent to families earning no more than 60 percent of AMI.

Rehabilitation of Blooming Meadows South did not require significant displacement of residents. The first phase of the work involved pressing issues such as repairing the roof, installing new boilers, and addressing other items essential to livability. More significant renovations typically would occur as occupancy naturally turned over; in cases in which the needed work was so extensive that families needed to be relocated, Aeon was able to offer temporary housing in vacant onsite units or a hotel to safely expedite repairs. The pandemic slightly disrupted this process. Inflation fueled increases in labor and materials costs, and the development’s turnover rate decreased in response to the pandemic, an eviction moratorium, and social unrest following the murder of George Floyd in Minneapolis, says Johnson.

Creating New Housing at Blooming Meadows North

In acquiring the nearly 18-acre Village Club Apartments site, Aeon discovered an opportunity to go beyond rehabilitation to expand affordable housing in Bloomington. The undeveloped areas of the site became Blooming Meadows North, a 172-unit, $54 million new construction project financed in part through low-income housing tax credits. Three-quarters of the units at Blooming Meadows North have an income limit of 60 percent of AMI, and the remainder have an income limit of 70 percent of AMI. The project’s tax credit financing enabled Aeon to secure funding to provide services to assist hard-to-house families and families transitioning out of homelessness. Because Blooming Meadows South employs a different funding structure, Aeon continues to seek financing to support expanded services for residents of the complex. The shared site allows residents of both developments to benefit from common amenities, including a playground, a swimming pool, a dog run, a picnic area, a fitness center, and community rooms.

Proactive Policy Supports for Housing Affordability

Concerns about the erosion of affordability in the Twin Cities area — in 2017, Minneapolis lost more than 1,800 units of naturally occurring affordable housing — helped prompt Bloomington’s leaders to create policy and financial tools intended to preserve housing affordability. Two such tools that supported the creation of the Blooming Meadows complex were the city’s Opportunity Housing Ordinance and its Affordable Housing Trust Fund. The city adopted affordable housing measures after it lost another naturally occurring affordable housing property to market-rate development.

The Opportunity Housing Ordinance requires that developers building new housing or substantially rehabilitating existing housing include a certain minimum number of affordable units. The ordinance accomplishes this goal through density bonuses, tax increment financing, and expedited reviews, among other incentives, which aided Aeon. According to Johnson, local leaders understood the importance of naturally occurring affordable housing in maintaining Bloomington’s housing supply. Johnson describes a clarity of vision and sustained political will from local leaders that put this policy framework into place, laying the groundwork for Blooming Meadows South and other projects supporting housing affordability in the city.

The ordinance also established the $15 million Affordable Housing Trust Fund in September 2019. Bloomington is one of the first suburban communities in the Twin Cities area to establish such a fund, which is available to projects with 20 or more units in which at least 9 percent of the units are affordable. The fund — of which Blooming Meadows South was the first beneficiary — enabled the city to deploy $7 million in capital, allowing Aeon to compete with private-sector developers for the site. In addition, the policy addresses a need exemplified by the former Village Club Apartments: the challenge of raising capital to maintain naturally occurring affordable properties, where lower rents often are insufficient to incentivize private landlords to invest in needed maintenance.

Bloomington’s longstanding commitment to preserving and creating affordable housing demonstrates the power of proactive intervention to prevent the rapid escalation of housing costs and ensuing displacement, ensuring access to safe housing and employment opportunities. The two projects also demonstrate the economic advantages of affordable housing preservation; replacement units in the Twin Cities area generally cost approximately $150,000 per unit to acquire and rehabilitate, whereas each new unit costs approximately $350,000 to develop.

The city hopes to use the trust fund to develop 842 affordable rental units by 2030, including 151 low-income units, 246 very low-income units, and 445 extremely low-income units. The city reinforces this commitment, reports Johnson, through the significant messaging work of city leaders focusing on the ways in which affordable housing, employment, and overall livability for residents are linked, which has fostered broad public buy-in for the initiative. With the two Blooming Meadows projects, Aeon and the city are demonstrating the importance of policies and funding tools that support the creation and preservation of affordable housing for households across the income spectrum.