The Affordable Game

Here in Saint Paul, MN, and in major metropolitan areas across the United States, the demand for affordable housing is very high. The City needs it. The Citizens are demanding it. The Developers… Well, they are in business to make money.

Developers are building at a record pace all over the city. They will tell you they just can’t build a fully affordable new apartment complex economically — it’s too expensive they’ll say (i.e. They won’t make the profit they were hoping for). But the City knows the high demand is there and needs to look like it is doing something about the affordable housing crisis so they’ll hold the Developer’s feet to the fire and only green light a project if a certain number of the units are affordable.

OK, but what is “affordable”. When you hear this phrase, do you stop to ask? Do you do the math? No? Let me help. Because, you should never trust numbers without data behind them.

In Saint Paul, the City and Developer may explain that “affordable” is 60% or less of average median income (AMI). The chart they use to calculate this is one that encompasses Minneapolis, Saint Paul, and Bloomington (see this chart). As you can see, AMI for 2020 is $72,350 for one person (update for 2023:  It’s now 87,450). It’s $93,050 for a family of three (Update for 2023: It’s now 112,450).

So, to meet the city requirements of 60% of AMI for a 1 bedroom apartment, it would have to be affordable to someone who makes at least $43,410 (2023 Update: $52,500).

So, what does that mean rent wise? Well, the figure Saint Paul uses is that 30% of a person’s gross income goes towards rent. Therefore, rent for that one bedroom would be $1085.25 a month.

Does that seem affordable to you?

Is it affordable for someone making a $15 an hour “livable” wage (don’t get me started on that term)? A person making $15 an hour would make about $31,200. So, in order for that person to be able to afford it, the rent would have to be around $780 a month.

So, whenever you hear Cities and Developers talking about affordable housing, especially here in Saint Paul, know how they are defining “affordable” and know that the people who really, REALLY, need it are not getting it. The Developers will tell you they can’t afford to build it and the City does not force them to.

What they are building — and what we as Citizens keep accepting — is luxury apartments meant for those at 100% of AMI.

What little affordable housing is being built, by the definition they are using, won’t solve the housing crisis. Won’t solve homelessness. Wont solve housing for low wage earners. Won’t even solve it for those making a $15 an hour wage. Won’t solve it for those making an $18 an hour wage (and in 2023 won’t solve it for those making a $22 an hour wage).

So, I hope the next time you hear the word “affordable” this will help.