Sonia Rani--Public Policy Intern

Renters tend to think price and location in deciding on a unit to rent. Should utility bills be a concern as well? Utility bills for a family of 4 can easily run around $2,000 per year. Meanwhile, the major appliances in your home – dishwashers, refrigerators, microwaves, clothes washers/dryers – account for a large portion of your monthly utility bill. If these appliances are more than a decade old, they’re likely gobbling up a lot more energy than you might know.

A ten-year-old refrigerator runs a home, on average, about $200 per year, while a new Energy Star refrigerator lowers that cost to about $50. That means old fridges have the ability to cost you $150 in a single year! (Vance Air Force Base News)

So, are you ready to make that hefty investment to a new $1000 Energy Star refrigerator? Probably not. As a renter, it is much cheaper not to invest in new appliances than it is to run old ones that may be inefficient. Though people ideally like to save money and energy, buying new appliances would cost renters far more than one year of utility bills. On the flipside, landlords have no incentive to provide newer energy saving appliances as it is the renter that generally pays utility bills; the landlord doesn’t recover any of the savings.

This is what economists refer to as a “split incentive” problem. Minnesota 2020, a Twin Cities public policy advocacy group, seeks to solve this split incentive by proposing several solution options. A recent report suggests;

• Customized rebates to landlords that could help them bear the costs of the new appliances. This money could come either in the form of a rental industry tax break from the state, or from the funds utility companies are required to set aside for energy efficiency work.
• No-interest loans that would allow renters to pay for new appliances through their electric bill bit-by-bit every month. The added cost on the bill would be capped at 90 percent of the monthly energy savings, so the renter would see a stable or slightly lower bill. If the renter moved the cost would stay with the apartment until the loan was paid back.
• A new state law that would require landlords to disclose the average monthly energy costs for each apartment before the renter signs a lease. That would add “market incentives” to encourage landlords to consider energy efficiency in order to make their units more attractive — renters would seek out units with lower monthly costs.      (Duluth News Tribune)

If a concrete solution could be implemented, renters could see lower bills, and landlords who offered units with new energy saving appliances could appear more attractive to prospective renters. However, the bottom line is that energy savings could be significant; replacing refrigerators that are older than 10 years in Twin Cities rental units would save enough electricity to power more than 3,000 homes every year. (MPR News)

It would be a win-win-win situation, and what’s not to like about that?

The legislative session is wrapping up, and tenants have continued to send in their stories about why the Renters’ Credit is so important in their daily lives.   An updated map is included below.

View Renters Credit 2012 in a larger map

For HOME Line, the Renters’ Credit issue isn’t simply about a tax increase on Minnesota’s low-income renters.  The ways in which this tax rebate is used underscores the dire need for more housing that is affordable at every level of income.

We all know that rent is not a monthly cost that people can reduce by living in their apartments just a little less.  We can’t give up a room or spend less time in our homes to save money each month.  Rent costs what it costs.

When even the cheapest rent is too expensive to afford, we resort to making ends meet by reducing other costs.  For many who get the Renters’ Credit, this means skipping meals, cutting medication doses in half, or missing out on doctor’s appointments because co-pays or even transportation to the doctor is out of economical reach.

For Renters’ Credit recipients, “cutting back” doesn’t typically mean giving up a daily Starbuck’s stop or shopping for new clothes from the clearance racks.  It often means giving up needs that are critical to good health, education, work opportunities, and fundamental quality of life standards.

Thanks to all of you who mailed in your stories and called in your concerns about the Renters’ Credit.  This important tax rebate was excluded from the conference tax bill—this means that for renters who have already filed for your property tax rebate, you will be getting the full amount you are expecting this coming August.  The MN Budget Project has more information about the conference committee’s tax bill here.  Congratulations and thank you for voicing your concerns!  Your efforts made a difference to many, many Minnesotans!

To some families, seniors, and people living with disabilities, the Renters’ Credit is essential to fulfill some of the basic functions of daily living. Over the past few weeks, we’ve had renters from across Minnesota call in to our Renters’ Voice (612-728-5770 x103) to explain the ways in which they would be affected by a slash to the Renters’ Credit. Thank you to all who participated! Among the responses we received, some mentioned uses for the refund include:

• paying off bills
• saving to visit family
• paying for doctor/dentist appointments
• covering insurance
• paying for medications

View Renters Credit 2012 in a larger map

Click on any marker in the map above to learn what Minnesota tenants have to say about the renters credit.

Updates from HOME Line
In the past two weeks, HOME Line has been hearing from tenants all over the state in the form of letters, petitions, and phone messages expressing how important the renters credit is in helping them get very basic needs met. Thanks to all of you who have written to us! If you haven’t yet voiced your concerns, call us, write to us, talk to your neighbors to do the same, and contact your elected officials to find out where they stand and ask them for their support! If they support the renters credit, please do thank them. For those of you who have called in to Renters Voice, we thank you for sharing your stories, and we will be posting your messages very soon.

Updates from the Capitol
Positive things are happening, but we must keep our voices loud. The House passed its tax bill that included cuts to the renters credit, however, this week, the Senate Tax bill was introduced and it excluded rent credit cuts.

So what does this mean for renters right now? We must keep up the good work of talking and writing to legislators, and encourage senators to pass a tax bill that is free of property tax hikes to renters. Once the two bills get combined in conference committee, we want to encourage a final (conference) bill that excludes this tax increase.

How you can help

• Call Renters Voice: 612-728-5770 x103
•  Comment below
• Request petitions or flyers to pass out in your building
• Call your state legislators’ office to ask them their views and voice your concern directly (then tell us how it went)
• To find out who represents you, go to the MN State District Finder
• If your legislators are supportive of keeping the renters credit, please thank them and ask them to stand strong on this issue

HOME Line sent out a call to action to renters around the state, asking you to make your voices heard once again on this very important issue.  Within less than a week, many of you are already responding!  Thank you!  We will begin posting your concerns and share them with your legislators very soon.

Today, we have received word that there is a new bill containing all the same cuts as before.  It proposes to reduce the percent of rent paid that a tenant can claim to 15%, and reduces income eligibility for households without a senior citizen or person with a disability from $39,999 per year to $24,999 per year. If passed into law, this tax increase on low income families would go to help pay for permanent property tax cuts to commercial businesses.

How would this affect you?  The MN Budget Project projects on their website that House File 2337 would cut the Renters’ Credit by nearly 40 percent – in addition to the cuts passed last year. Nearly one in four households would lose their entire credit – that’s 74,600 households. The average credit for households including seniors and people with severe disabilities would be cut by $111, and the average credit for all other households would fall by $265.  These cuts would take effect for the check you would receive this coming August.

There was a House Taxes Committee hearing this morning, and Representatives Lenczewski, Rukavina, and Marquart spoke out against this tax break for businesses at the expense of renters with low incomes.  Thank you Representatives for standing strong for renters! The House Tax Committee will be holding two more hearings for the new bill (HR 2337):  Wednesday the 14th, and Thursday the 15th.  Please continue to share your stories!

• Call Renters Voice: 612-728-5770 x103
•  Comment below
• Request petitions or flyers to pass out in your building
• Call your state legislators’ office to ask them their views and voice your concern directly
• To find out who represents you, go to the MN State District Finder
• If your legislators are supportive of keeping the renters credit, please thank them and ask them to stand strong on this issue

We will share your stories and concerns with your legislators and on our blog!

It would seem that the renter’s credit is a hot item to use for balancing the state budget.  This year, however, some legislators are revisiting this property tax rebate for low-income renters to help pay for a permanent property tax cut for corporate businesses.  It’s time to change this regressive pattern!  But first, let’s recap recent events:

In 2012, this bill has come up for consideration twice:  in the House Property & Local Tax division on February 3^rd and in the House Tax Committee on February 9^th.  We at HOME Line were unable to attend either hearing, however, we watched some of the February 9^th Taxes hearing online, and would like to give a shout-out to legislators who spoke out on behalf of renters and the harm that this bill would ensue on many households who rely on the renters credit.

A big thanks to Representatives Hortman, Lenczewski, Lesch, Loeffler, Paymar, and Rukavina for supporting renters on this very important issue!  If you spoke up for renters at this hearing, and we missed your name, please let us know! We want to share with tenants around the state that you stuck up for their interests during this hearing.  Please keep fighting for those with modest means, to help them stay in decent housing they can afford!

Renters:  If one of these folks is your representative, give ‘em a call and thank them; ask them to keep up the good work!

The skinny:  HF1914 proposes to cut the renters credit for 2011 property taxes, so this would affect your tax return that you file this year.  If passed into law, the percentage of rent paid (already cut from the previous 19% to 17%) would drop to 15% for all eligible renters.

Eligibility would also change for renter households that do not have a disabled or elderly family member living in them.  The current income level allowed for eligibility is less than $40,000 per year.  This would stay the same for households with seniors and people with disabilities.  For working families without a disabled or elderly family member, their annual income eligibility would drop to less than $25,000 per year.

Some Perspective:  A household with two adults working for federal minimum wage of $7.25/hr. at 52 weeks out of the year, earn a gross income (before taxes and exemptions) of $30,160.   So I would assume that a couple working at a fast food restaurant would likely be earning this amount, or something close to it.  I bet they could really use their renter’s credit when it rolls around, don’t you?  Some legislators think they shouldn’t qualify. The National Low Income Housing Coalition cites in their 2011 Out of Reach report that the average Minnesota household requires an annual income of $32,839 in order to afford a two bedroom apartment of about $821/ month in rent.  If they live in the Twin Cities, they need to earn $36,960/year to afford an average rent of $924/month.

If HF1914 passes into law, this couple’s employer will likely benefit from a property tax break, and they would not. Instead, they would continue to work hard, receive few benefits, and make tough choices about how to spend the little money they have left after rent is paid. Medication, food, car repairs, school supplies?  What should families, seniors, and people with disabilities give up so that businesses can get a break?

If you think this is wrong, please call your state representatives and let them know (politely) how you feel.  If you have already experienced cuts to your renters credit, let them know how it affected you.   If you stand to lose more, let them know what you won’t be able to do because of the cuts.

Go to Speakforwe’s link for a terrific tutorial on calling your legislator.   To find out who represents you, visit http://www.gis.leg.mn/OpenLayers/districts/.

HOME Line Organizer, Eric Hauge, submitted a terrific opinion article to MinnPost  (or click for PDF version) on needed prevention of disastrous living conditions that result from landlord negligence.  City governments are taking serious action against landlords who fail to address major repairs and infestations, allowing their buildings and tenants’ living conditions to fall into squalor.  By the time local governments take action, however, the question at hand is whether tenants are better off living in unsafe or unhealthy conditions, or are they better off displaced (leaving those most vulnerable in danger of homelessness).  The answer Hauge asserts is that it should not come down to dire straits, but rather, there are other more preventative tools already available to local governments, and that legislation allowing tenants to screen prospective landlords should be passed.  Preventing the situation from getting this bad would save money, time, and difficulties for all parties involved.

What else should tenants know?

Tenants who find themselves living in a building that has either been condemned by a city, or whose landlord’s license has been revoked, may not be obligated to pay rent.  If the home has been condemned, the tenant may also request in writing to have their full security deposit returned to them within 5 days.  Collecting this deposit could take some work a tenant’s part, however, possibly by taking the landlord to conciliation court.  Because each situation is different, it is best for tenants to consult with an attorney (at HOME Line, Legal Aid, or other legal counsel) before deciding to withhold rent.

What else can tenants do?

Share with us your thoughts how screening your landlord before signing your lease would have helped you make a more informed (or different) decision about where you chose to live, or where you will choose to live next.

Here in Minnesota, a number of legislators are introducing or have introduced budgetary amendments that, if passed, will:

• (HF 1598)  require a “super majority” or a 3/5 of a majority vote to pass a tax increase—instead of the current simple majority of 51%
• (HF 1661/ SF 1378) limit general fund spending in each biennium (every two years) to 98% of expected income for the state and
• (HF 1612/ SF 1364) limit all spending to the amount of all income (revenues) collected in the previous biennium.

People are still suffering the effects of the recession, and many are out of work or really scraping by right now, so saving on taxes sounds really good, doesn’t it? Especially since the state government shut down last summer all because they couldn’t agree to much of anything.  Why should they have our hard-earned dollars to sit around and bicker?

Well, on the surface, that’s a pretty sound argument, but let us dig a little deeper and see what it really means for Minnesota’s future and how it can affect each of us as individuals.

The first point to make is that in summer of 2011, we witnessed a legislature so torn in half that getting anything passed seemed nearly impossible.  As a result, the government shut down for two weeks.  That happened with a simple 51% majority vote required to get something passed.  Can you imagine how much more difficult it would be if a 60% majority vote were needed to pass a tax increase?  What if the I-35W Bridge collapsed or North Minneapolis was ravaged by the tornado under such a law?  How would our state be able to handle such an emergency when a speedy consensus to provide aid is so critical?

Another point of concern is that this type of legislative gridlock can lead policy makers to make back-room deals in order to meet their constituents’ needs.  There is no transparency in that type of process, and it allows for more corruption and shady dealing.

Limiting the state budget from future growth means limited funding toward things that most people value, such as a vibrant education system, viable roads, workforce training, and public safety. It also doesn’t allow for long-term goal setting.  This would tie the budget to yesterday’s issues, rather than the unimagined possibilities for tomorrow.

If these three amendments pass both houses of the Minnesota legislature, the plan is for them to be included on the 2012 election ballot for voters to choose.  This way, the governor will not be able to veto them.

Passage of these bills are guaranteed to harm assistance for low income renters.   Each year, we fight to preserve the renters credit, and keep funding alive for housing that lower income families can afford.  If these are issues you care about, then these budget amendments should also matter a lot to you.

The Minnesota Budget Project has great information on these three amendments (that I raided for this blog) as does the Center for Budget and Policy Priorities.  CBPP has excellent information about how similar laws are  harming other states .

If you would like to learn how to follow these bills, Speak for We has a great tutorial on how to use “MyBill” on the Minnesota Legislature’s website. Check these sites out and stay tuned to HOME Line’s site for ways you can help stop these and other harmful measures in Minnesota.

December 22^nd, the StarTribune published an insightful opinion article, “Downtown 2025 plan must include job equity,” by Avi Viswanathan of Hire MN, responding in part to the Strib’s Dec. 14^th Editorial, “By 2025, a bigger, livelier downtown Minneapolis.”

In his own article, Mr. Viswanathan writes, If we want a healthy economy… our approach to solving the problem of our disparities cannot be separated from any of our long-term strategies and grand visions, much less from our plans for large public and private investments. We must have a systemic and integrated approach so that equity becomes a necessary component of each and every plan for how our city and region develop.

I would like to piggy-back on these comments by raising further concern over the lack of housing affordable to people with low, very, and extremely low incomes.  Solving homelessness must also be part of a long-term strategy and grand vision, rather than a side note, intended to get some more people off the streets for a night or two. “By 2025…” credits the city with its idea to provide …permanent shelter and support services for the 300 to 500 people who will sleep outside in downtown Minneapolis tonight and most nights this winter. And that the project, …anticipates both significant corporate donations to pay for projects and funding help from all levels of government. Both will be required to accomplish this plan’s goals.

That said, I would like to now shift gears and turn some attention to a federal program called Section 3.

Have you heard of Section 3? Me neither. I never knew about this program until someone recently asked me about it.  I had to look it up. NLIHC offers a great (and more complete and accurate) description of it in their Spring issue of Tenant Talk and in their 2011 Advocates’ Guide.  Section 3 was designed as part of the Housing and Urban Development Act of 1968 to provide work opportunities for public housing residents, businesses owned by public housing residents, HUD Youthbuild participants, residents of the neighborhood or businesses that provide economic opportunities to individuals in the neighborhood, and homeless individuals.

What, you may ask, does this have to do with Minneapolis’s grand vision for its future, and the need for racial and economic equality to be addressed within the plan? 

In short (kinda), Section 3 determines that with any number of particular HUD grants used for public and Indian housing or for certain development projects (like this one, perhaps), the grant recipient is supposed to give preference for 30% of its new hires (related to the development project), to eligible individuals that are low-income, homeless, live in the neighborhood, etc. Therefore, if this project were to come to life, and becomes even partly funded by HUD grants, the city and contractors must be held accountable to hiring some of the folks experiencing homelessness and individuals with low-incomes who are already living in the neighborhood to assist with the project.

Developing sustainable communities that connect jobs and transit with more affordable housing options for low-income residents and creating job opportunities for those who need greater housing stability would be an excellent companion piece to advancing racial equity within the plan.  Not only that, but enforcing Section 3 would help to create a financial return for HUD and local housing authorities, as residents would be increasing their own contributions in rent.  That would be a much better way for the government to save than by cutting HUD programs at a time when people need jobs and housing.

According to the NLIHC, enforcement of Section 3 has been neglected until the Obama Administration began taking steps to hold grant recipients accountable to report on their hiring practices.

If advocates are vigilant in holding local governments and contractors accountable to complying with Section 3 on HUD funded projects, much of the same effort can be simultaneously and equally applied when ensuring that people of color are given a fair shot at those work opportunities as well.  What’s that saying again?  “We all do better when we all do better?”

Senator John Marty

Affordable housing has been an issue that policy makers and politicians have dealt with for decades.  To be considered affordable, no more than 30% of a household’s income should go toward rent. The remaining 70% should go toward food, clothing, medical expenses etc. Currently, millions of Americans pay over 30% of their income toward rent/housing needs.

The current federal minimum wage is $7.25 per hour. If one person works full-time (40 hours per week) at the federal minimum wage level, affordable housing for this individual would be $348 per month to cover both housing and utilities. Unfortunately, finding housing at that rate is next to impossible, so many people use federal subsidy programs, which pay the difference between market rate and what is affordable for the individual.

In this podcast, you will hear from Dr. Jeffery Crump, Associate Professor of Housing Studies at the University of Minnesota and State Senator John Marty, who represents District 54 encompassing Roseville, Shoreview, St. Anthony, and Vadnais Heights. Dr. Crump and Senator Marty took the time to sit down with me and talk about affordable housing, what has been done, and what could be done.

To listen to the 11min podcast, click here.