Don’t Forget: We Need More Large Apartments

Back in May, the City of St. Paul released the results from its early engagement on Phase 2 of the 1-4 Unit Housing Study, a policy initiative from St. Paul Planning and Economic Development to consider legalizing more types of “neighborhood scale” housing, such as duplexes to four-plexes, row houses and cottage clusters. 

These potential changes could end the scourge of single-family zoning in St. Paul and allow for housing options that are more dense, flexible and affordable. And as a supporter of zoning reform, I believe the survey results showed good news: People were generally in favor of policies to zone for more housing in their neighborhoods. 

The graph below shows which types of housing survey respondents thought were needed in their neighborhoods. When I first saw this graph, I focused on the results about the “missing middle” types of housing that are within the scope of the 1-4 Unit Housing Study, noting the majority support for all of these kinds of housing.

But it’s also noteworthy how much support drops off for large multifamily buildings. Many respondents of this survey who were supportive of “neighborhood-scale” housing were not supportive of buildings with more than five units, and especially not supportive of even larger developments. This lack of enthusiasm for larger developments has shown up more than once in St. Paul recently, with some residents pushing against large proposed developments on Grand Avenue and Mississippi River Boulevard.

However, housing advocates cannot forget the importance of large developments to St. Paul’s housing. These types of housing developments contribute enormously to the housing stock in our cities. With the Twin Cities’ low rental vacancy rates and expected population growth, we need more housing of many stripes, including large multifamily. We will not have enough housing without such housing projects. 

To begin understanding why this is true, we can first look at the composition of housing permits in St. Paul since 2000. Almost all of the housing construction in the city has come from multifamily buildings with over five units.

Now, it’s a tautology to say that there were almost zero units added from two- to four-unit buildings because those buildings are illegal to build in much of St. Paul. Advocates like Daniel Parolek, who coined the term “missing middle housing,” make this point: in our current zoning regime, housing comes either in the form of single-family homes or very large buildings. 

What about places that have changed these kinds of zoning laws recently? Minneapolis famously legalized this kind of housing across their city with the 2040 plan. As Alex Schieferdecker has shown, Minneapolis didn’t see a surge in two- to four-unit development after passing the plan. But with such a low baseline unit contribution of two to four units, even a relative “surge” in housing production would have had a limited impact on total housing production.

We can also look at Portland, which had a neighborhood-scale zoning reform of its own a couple of years ago. 

This is not to say that Minneapolis’ and Portland’s small-scale zoning reform victories weren’t successes. Such changes matter, and should be replicated in other cities. According to one report, the nation today is building about 10 to 15 percent as much two- to four-unit housing as it was in the 1960s and ’70s. This is a failure that needs to be addressed (and probably not just via zoning reform).

Yet ultimately, addressing the housing shortage requires us to play the numbers game. A duplex is two units; large apartment buildings can have 200 units. While we need the former, we can’t get by without the latter. Using a Met Council dataset of permits in the metro area from 2009 to 2018, we can get a more granular breakdown of this information. We see that it’s not just buildings with five or more units doing the heavy lifting, but especially very large buildings.

Large apartments don’t just account for the bulk of new market-rate homes in our city; they also account for the majority of subsidized affordable units. Because market rate-housing has more benefits for high earners than low earners, this question should be of considerable interest. The below graph shows the composition of low-income units by building scale among all projects built or preserved using the Low-Income Housing Tax Credit in Minneapolis and Saint Paul, since the program’s inception in 1986. We once again see the importance of large buildings — especially very large buildings.

One of the most important factors at play here is the economies of scale involved in affordable housing production. Managing LIHTC properties has large fixed costs for management and compliance. As a result, it’s rarely worthwhile to build an affordable housing project that is just 20 units. 

Additionally, more than half of St. Paul’s public housing stock comes via its 16 high-rise buildings, which average about 160 units per building. 

Larger buildings also appear to matter for other outcomes than quantities of housing units, too. In their new report on zoning in the Twin Cities, researchers Salim Furth and MaryJo Webster generally find that block groups with less restrictive zoning tend to have sizably larger non-white populations — and in particular, that the amount of racial diversity increases the most on block groups zoned for multifamily housing. 

The authors hypothesize that non-white Twin Cities residents are more likely to rent, and areas with multifamily housing tend to have higher proportions of rental units. One takeaway is still the same: Allowing more multifamily developments should be a top priority.

Again, none of this is to say that we shouldn’t fight for ending single-family zoning or allowing more two- to four-unit buildings — just that we also ought to fight for pro-housing policies that increase the amount of larger multifamily buildings. 

When Minneapolis passed its 2040 plan, the headline just about everywhere was that the city had ended single-family zoning and legalized triplexes across the city. But the national conversation mostly neglected the other changes that allowed larger developments near transit and enacted a minimum height requirement in some parts of the city. Likewise, we should celebrate California zoning for duplexes statewide, but it’s probably a bigger deal that they passed a bill which variously zones different commercial corridors for taller buildings with 30 to 70 homes per acre. 

These changes would mean far less without reductions or eliminations of parking minimums. Both Minneapolis and St. Paul have eliminated parking minimums in the past few years, while California recently did the same for all developments within a half-mile of major transit stops. Building 100-unit buildings is unnecessarily challenging when you also need 150 parking spots.

Addressing our urban housing shortages and achieving housing affordability will require fighting a battle on many sides at once. Don’t forget that part of that battle is having more large housing developments in our cities.

For questions on data and code, email zyudhishthu@yahoo.com

About Zak Yudhishthu

Pronouns: He/him

Zak is a student at Macalester College studying economics and music. He's interested in all kinds of urban politics and policy, and is the student representative for the Macalester-Groveland Neighborhood Council. Tweet him @zyudhishthu or email him at zyudhishthu@yahoo[dot]com.