Rochester Workforce Housing Shortage Brought into Focus at Recent Policy and a Pint

About the author: Ryan Cardarella is a freelance writer who recently moved to Rochester after spending 12 years in Milwaukee.

A standing-room only crowd gathered at Bleu Duck Kitchen on Thursday, June 29 for a distinguished panel discussion on workforce-priced housing in Rochester. The event was part of the Policy and a Pint event series presented by the Citizens League and Minnesota Public Radio’s (MPR) The Current.

Moderated by MPR’s Steve Seel, panelists included: Steve Borchardt, Housing Initiative Director for the Rochester Area Foundation; Julie Brock, Workforce Strategy Consultant for the Minnesota Department of Employment and Economic Development; and Pat Sexton, President of Sexton Public Affairs and former Government Affairs Director with the Southeastern Minnesota Realtors Association.

The panelists first dove into the key housing challenges facing working-class Rochester residents before offering their solutions and opening the discussion to the audience.

Borchardt set the table for the discussion by referencing that 36% of Olmsted County households earn less than $50,000 in gross annual income and 25% earn less than $35,000, yet only a handful of homes in Rochester are currently on the market in the $150,000-$215,000 price range that the working class can afford. Additionally, inventory is low for these homes and the competition is fierce, with buyers often needing to offer well over the list price to secure one of the few homes in this price range.

In a city poised for robust public and private sector growth thanks to the Destination Medical Center and other business initiatives over the next twenty years, Borchardt believes that working-class Rochester residents are in a tough spot.

“Do I think we are in a crisis? Yes, I believe we are in a crisis,” he said.

Sexton posited that a combination of mitigating factors—including more conservative lending practices, increased regulation, and ten years of less than one percent GDP growth—have made constructing more affordable homes a challenge for builders. These factors have led builders to choose more profitable paths, constructing large apartment complexes and more luxury homes, while creating a shortage of more affordable single-family houses.

“No one should be surprised that these homes are not being built,” Sexton explained. “There’s no money, there’s no builders, there’s no labor, and there’s no desire for risk.”

Brock stressed the need to attract more workers to Rochester to create the demand necessary for builders to effectively address the working-class housing crunch, but admitted that striking a balance would be tricky. She advocated for the city to take a holistic view of the workforce and for “the gears of childcare, public transportation, and affordable housing to work as a motor to drive economic development and growth in the city.” The calibration of those gears would ensure that Rochester continues to attract people of all income levels to work and live in the city.

While the challenges facing the Rochester housing market are complex, panelists also shared a belief that through innovation and collaboration, progress can be made.

Sexton advocated for reduced regulation, increased partnership with the City of Rochester, and a more innovative building approach to make construction of affordable housing more economically viable for builders. Instead of proposing singular solutions or “planting one flower or seed,” Sexton is hopeful that the city can help “change the soil” and address overhead costs and the overall dynamics and expenses of building.

Borchardt is “very hopeful” on the single-family home front and believes that the market can be welcoming for first-time homeowners if they adjust their expectations and are willing to put in work on a starter house.

“If you have a tolerance for risk and have some innovation and creativity in you, this is a great time to be out there in the market,” Borchardt said.

Brock believes that employers will need to take a more hands-on approach to housing issues, citing local businesses that have helped employees buy and sell their homes to address the present situation.

“We have to rethink how we are doing work,” Brock explained. “If we are not willing, as an employer, to address these barriers and ask, ‘How can I help?’ we are going to have perpetual problems.”

Moving forward, the panel agreed that one of the most important ways to influence change within the current city housing market is to bring it to the forefront of the conversation, both in the workplace and the greater community.

“It’s important for people to talk about this issue at work, at church, and on a grassroots level,” Borchardt said. “This issue needs to be center stage in the community.”

For additional information on the Policy and a Pint series, visit http://www.thecurrent.org/collection/policy-and-a-pint.