Racial Equity Impact Analysis (REIA)

The Housing Tax Credit (HTC) Program is a federal program that provides a reduction in tax liability to owners and investors of qualified low-income rental housing. The objective of the program is to allocate HTCs to owners of rental projects to produce new and preserve existing affordable rental housing that serves households earning at or below 30% up to 80% of area median income, with an emphasis on deep affordability, and to ensure long-term affordability of these rental housing units.

The City of Minneapolis (through its participation in the Minneapolis/St Paul Housing Finance Board) is a sub-allocator of HTCs. As a sub-allocator, the City is required to establish priorities that will be used to allocate HTCs, which is done through the Qualified Allocation Plan (QAP). The Tax Credit Procedural Manual is a companion document to the QAP and describes how the City will administer its HTC Program. Through these documents, the City allocates both 9% and 4% HTCs to qualified projects.

The 2024-2025 Housing Tax Credit Qualified Allocation Plan sets forth criteria for prioritization of applications based on project and tenant characteristics for allocation of 9% and 4% HTCs. The 9% HTC scoring criteria prioritizes new construction outside of ACP50 areas to provide greater locational choice when seeking out affordable housing and supports rehabilitation projects in ACP50s to improve housing stability for current residents.

According to the 2017 – 2021 American Community Survey 5-Year Estimates, the racial demographics of Minneapolis is 18.2% Black, 1% American Indian, 5.6% Asian, 9.8% Hispanic or Latino, 4.7% Two or more races alone, and 60.1% white.

The HTC program also supports the development of units for people that are experiencing homelessness. Data shows that African Americans and American Indians are disproportionately affected by homelessness. According to the 2018 Minnesota Homeless Study by Wilder Research, in Hennepin County 49% of adults (age 18 or older) experiencing homelessness are African American, and 15% are American Indian, compared to being only 9% and 1% of the 7-county metro population of adults, respectively. This is compared to 23% of adults experiencing homelessness are white, compared to being 76% of the county metro population of adults. Similar racial disparities exist for unaccompanied youth aged 24 or younger.

Racial disparities in housing can be measured across data in homeownership, housing cost-burden, homelessness, and are experienced through the impacts from the COVID-19 pandemic.

In Minneapolis, BIPOC households are more likely to be renters compared to white households. According to the 2012 – 2016 ACS 5-Year Estimates, in Minneapolis about 20% of Black, 20% of American Indian, 25% of Latino, and 34% of Asian households owned their home, whereas 58% of white households owned the home they occupied.

Housing affordability continues to be a growing issue that Minneapolis residents face. Housing costs have risen relative to incomes for renters in Minneapolis, but not for homeowners. The rising cost of rental housing is disproportionately impacting households of color who are paying a large percentage of their income on housing costs. According to the 2015 – 2019 ACS 5-Year Estimates Public Use Microdata Sample, at least 50% of Black and American Indian households, 45% of Hispanic or Latino households, and 38% of Asian households are housing cost burdened, whereas only 28% of white households are housing cost burdened.

Evictions also disproportionately affect BIPOC households compared to white households. While court filings do not collect racially disaggregated data of tenants, according to a 2016 Minneapolis Innovation Team’s report, Evictions in Minneapolis, of the sample of the 174 cases that were reviewed, 93% of the stated reason for eviction filings was because of nonpayment of rent. When looking at the geographic distribution of eviction filings, and for cases that reached judgements, a disproportionate number of filings and judgements occurred in neighborhoods that are racially concentrated areas of poverty – which includes north Minneapolis and areas south of Downtown in the Phillips and Powderhorn Communities.

Data shows that African Americans and American Indians are disproportionately affected by homelessness. According to the 2018 Minnesota Homeless Study by Wilder Research, in Hennepin County 49% of adults (age 18 or older) experiencing homelessness are African American, and 15% are American Indian, compared to being only 9% and 1% of the 7-county metro population of adults, respectively. This is compared to 23% of adults experiencing homelessness are white, compared to being 76% of the county metro population of adults. Similar racial disparities exist for unaccompanied youth aged 24 or younger.

The COVID-19 pandemic has also exacerbated the racial disparities and housing instability experienced by BIPOC households. The City of Minneapolis established a gap fund for housing programs in April 2020 to respond to the immediate needs created by the COVID-19 pandemic. The program established the Emergency Housing Assistance (EHA) program and the expansion of the Stable Homes Stable Schools program. Of the 1,127 approved applications for the ERA program, 40.9% of the applicants were Black, 1.3% American Indian, 34.0% Latinx, 2.4% Asian, 3.3% multi-ethnic, and 9.5% white. Of the 528 approved applications for the SHSS program, 42.2% of applicants were Black, 2.2% American Indian, 34.3% Latinx, 2.1% Asian, 3.4% multi-ethnic, and 6.5% white. These outcomes underscore the disproportionate impact of the pandemic on BIPOC households as it relates to housing stability.

The 2020 Current Population Survey shows the racial disparities in unemployment rates across Minnesota. Throughout good and bad economic times, white workers have consistently had lower unemployment rates than BIPOC workers. 2020 shows that the unemployment rate for white workers is 6.4%, Asian workers 11.7%, Latino workers 12.3% and Black workers 22%.

Racially disaggregated data on income, housing, and housing tenure for Minneapolis is generally available. Staff will continue to track Housing Tax Credit allocations as well as reporting on citywide housing trends and its impacts on racial equity. Additional work should be done to provide narratives around housing outcomes for BIPOC communities to support future program changes in its role in addressing racial equity in housing.

The Housing Tax Credit Program creates new and rehabilitates/preserves existing housing units that are affordable to households earning at or below 30% up to 80% of Area Median Income, with an emphasis on deep affordability, and will directly serve households that meet the federally imposed rent and income restrictions. The changes to the overall HTC Program, and targeted changes within the 9% and 4% HTC selection criteria will support housing outcomes that close racial disparities in housing. It is important to note the competitive nature of the 9% HTC Program in which projects are ranked, whereas projects applying for the 4% HTC must meet the minimum score set by the City and the selection criteria.

BIPOC households are disproportionately impacted by the rising cost of rental housing. The cost of housing has increased relative to income for renters, but not for homeowners. While homeownership is a pathway to build wealth and housing stability, it remains a barrier for many BIPOC households due to the history of discriminatory housing practices and lending. As part of the strategy to close these disparities and provide housing stability, more affordable housing must be produced that serves households that are the most cost-burdened by housing, which includes units that serve households at 50% and 30% of Area Median Income. The required minimum 30-year duration period of affordability will also ensure that the units remain affordable for future households.

Access to affordable and quality homes and jobs is one of the key measures in achieving racial equity in the city. The targeted approach to serve residents that are impacted by displacement will facilitate stronger project proposals that close the disparities in housing and employment.

Staff will continue to monitor and track housing tax credit allocations and housing outcomes such as the number of affordable rental housing units that are produced and preserved through City investments, and the number of units that are serving households at various levels of affordability.

CPED staff currently reports on their work through various public reports and data dashboards. CPED continuously strives to identify more consistent and accessible ways of tracking the state of housing in Minneapolis as well as outcomes for residents disaggregated by race and other important factors.