Bold CPED Leadership and Action Needed for Housing and Small Business

Minneapolis’ greatest asset is its people: the families and workers that pour their time, talent and love into the fabric of the community. But in a city where the majority of residents are renters, many feel the Minneapolis Department of Community Planning and Economic Development (CPED) prioritizes courting big developers and accentuating the property tax base. Instead of serving the people, CPED’s actions and approach continue to drive the widely recognized housing crisis and makes it challenging for small businesses to start, grow and thrive.

Following the City Council’s vote on January 29, 2020, to reappoint David Frank as Director of CPED — a department with a budget of nearly $131 million and more than 250 staff — renters, affordable housing advocates and small business owners will call for significant shifts in the department’s practices and priorities that are further elaborated in this joint letter.

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Bold CPED Leadership and Action Needed for Housing and Small Business

Minneapolis is experiencing a critical and expanding affordable housing crisis in the midst of population and development growth that too often do not benefit its current residents. This crisis demands bold action on the part of the City of Minneapolis and must define the work and mission of the Department of Community Planning & Economic Development.  

Advocates and community members demand a new vision and cultural shift within the department, beginning with its leadership – a change in values that centers those who already live in our city, many of whom are being actively displaced and removed from it.  CPED must fully utilize its tools and power to champion and lead on the reforms and critical interventions that are needed to meaningfully address the housing crisis and repair the growing damage it is causing to our neighborhoods our people.

Small business owners face a parallel set of challenges. As our neighborhoods grow, small business owners are increasingly strained by rising rents, a tight labor market, and difficulty accessing financing.  The business-facing programs at CPED were designed years ago in a different economic climate and are now insufficient to confront the challenges our small business community faces. We need to prioritize small businesses given their impact on our economy, the asset-building role they can play in low-wealth communities and how vital they are to the identity and livability of our city.  

We need more than incremental, glacially-paced change. We need bold vision and leadership, new programs and intentional policies, and a new mindset at CPED that holds itself accountable to our existing and emerging small businesses and residents, and prioritizes low-wealth communities and communities of color.

We envision a CPED that:

• acknowledges the crisis and emergency that we face.
• is community-oriented, not market-oriented.
• exists primarily to serve the people of Minneapolis, not large developers and corporations.
• seeks to grow Minneapolis with intentional goals to improve the lives of current residents, not one that encourages unfettered growth without consideration of who benefits and who is negatively impacted
• seeks to end racialized displacement and eliminate racial disparities in housing and small business.

Critical Housing Strategies

To demonstrate CPED’s commitment to this shift in vision and outcomes, the following action steps must be taken within the department:

Redefine city affordability guidelines and goals to reflect a Minneapolis Median Income (MMI) that is based on the actual incomes of Minneapolis residents: HUD’s definition of Area Median Income (AMI) is 1.67 times more than the true Minneapolis Median Income of our resident.  Using a city-based median income for city programs and policies would more accurately take into account the intersection of racial and income-related diversity of Minneapolis.   The current HUD target of 60% AMI results in effectively market-rate units that are out of reach to the City of Minneapolis’ residents; 30% AMI must be prioritized.

Increase intervention in the private real estate market using public land for the most critical public needs, as defined by impacted communities: The profit-driven real estate market cannot account for human needs of the people excluded from it.  When land is publicly-owned, community voice and community needs must lead and guide its use. Development of public land should begin with an articulated, transparent process through which community members direct the best use of land to meet community needs and end with the selection of a developer who aligns with the values and goals of the public project.  The department must develop co-ownership and land trust models for the land below any developments in order to maintain a permanent public benefit.

Commit to not providing public subsidy, financing, TIF, or tax abatement for any project that does not include housing affordable to 30% & 60% MMI households: By providing public funds and tax abatements for developments that are not accessible to residents earning the lowest incomes, CPED invests public money in exclusionary housing. Public dollars should be dedicated to public goods – goods that are accessible to all, not just moderate- or high-income households. 

Take a firm leadership role on reforms by championing policies that intervene in the market, remove land from the speculative real estate market, and advocate for additional rights and protections for tenants: Our communities have been fighting to shift the imbalance of power in our housing system with tools that decommodify land and housing to place them in community control. We need CPED to fully utilize its tools and power as a community development agency by acting as champions for community-led solutions like Tenant Opportunity to Purchase.  Minneapolis CPED must lead in our City and the region to ensure that development does not continue the racialized displacement of people who can no longer stay in their homes and ensure that our city is owned by the people who live here rather than outside developers.

Within this vision of CPED, outcomes and indicators of housing success are:

• a baseline of zero net loss of affordable housing and zero additional displacement for people of color and low-wealth communities
• aggressive goals for an increase in housing in the city that is truly affordable (30% AMI) to the current residents of Minneapolis
• a Public Land Disposition Policy that is community-driven, creates permanent public benefits, and includes truly affordable housing requirements in every proposal
• zero public funding given to projects that do not include truly affordable housing
• an increase in the amount of land purchased, held, and developed by the city for truly affordable housing
• steep increases in fees on new large development (i.e., construction excise fee), as well as additional market interventions to directly fund the affordable housing trust fund
• increase in community ownership through strategies that support permanent affordability
• increase in lobbying activity at the state level to legalize and pass one or more local, long-term, dedicated sources of funding for housing

Critical Small Business Strategies

To demonstrate CPED’s commitment to this shift in vision and outcomes related to the 2040 Comprehensive Plan & SREAP, the following action steps must be taken within the department:

Make small business success and growth the centerpoint of economic development per the 2040 plan, with identifiable, results-based metrics: This includes an evaluation of staffing levels within the Department to adequately address the needs of small businesses.

Ensure that CPED has a direct relationship with small businesses: CPED should take ownership of proactive, direct, intentional outreach to small businesses to connect with existing businesses, help new businesses get connected to the resources, and engage small businesses in place based project development. While the city should continue to provide robust support for neighborhood and business associations, it should not delegate/ outsource all of its responsibility of a relationship with businesses. While partner organizations play a key role through BTAP and other programs, the city must take the lead in this outreach. There must be a plan for continued expansion of the small business team, so that businesses in every ward can easily access it. In addition, the small business team must be able to suggest and recommend changes to cut red tape and barriers that small businesses face. 

A commitment to overhaul the 2% Loan Program: Last year the 2% loan program served 49 businesses and the Small Business Review reports that providers estimate that half of the businesses would have gotten a loan from the bank without it. CPED must take ownership over confronting barriers that BIPOC small businesses face especially if that means taking a role where there are market gaps because of redlining and market failure. We need a commitment that CPED will provide direct resources to people who would not otherwise get a loan from a bank or lending institution access credit they need to start and operate their businesses. We must structure programs with the needs of small business owners in mind and especially to support those that most need the support of the city — those who cannot get approval for a bank loan. 

A commitment to big picture changes and creation of new programs and tools for small businesses: Far too many businesses struggle, fail or cannot start due to a lack of access to capital because of barriers in our market.  We need to do more than connect BIPOC businesses to existing resources that are available. The current resources available perpetuate racial gaps. The City should also invest in new program to help small businesses buy their own building and work to create new programs that aren’t about property acquisition including workforce development and legal assistance.

Ensure that we have metrics demonstrating how results of programs are in line with equity goals: CPED should undergo an annual evaluation of its loan programs with consistent data that ties to goals. This includes taking ownership over regular tracking the 2% loan program- tracking interested participants, who is approved and denied, evaluation of BTAP results, and ensuring that all programs, including the new Commercial Property Development Fund, achieve their stated goals.

Signed by: The Alliance, Inquilinxs Unidxs Por Justicia, HOME Line, Parks and Power, Jewish Community Action, Housing Justice Center, Powderhorn Park Neighborhood Association, Main Street Alliance