amaam Aitkin Demographics Overview

Section Table of Contents


Page

Demographic Data Overview

A-2

Population Estimates and Trends

A-4

Population Projections

A-5

Population by Age

A-6

Population by Age - Comparison with Minnesota

A-7

Households Estimates and Trends

A-8

Average Household Size

A-9

Household Projections

A-10

Households by Age of Householder

A-11

Household Characteristics

A-12

Households by Tenure

A-13

Income Data

A-14

Existing Housing Inventory

A-15

Permanent and Seasonal Housing

A-16

Census Housing Vacancy

A-17

Home Values

A-18

Home Sales

A-19

Home Sales - Historical Data

A-20

Land and Infrastructure Availability

A-21

Rental Housing

A-22

Findings and Recommendations

A-27

 
City of Aitkin:

Demographic Data Overview

Sources of Data:

The following pages contain demographic data obtained from a variety of local, state and national sources. During the course of this Study, Census data was being released from the 2000 Census. Whenever data from the Census was available, it has been used in this Study. However, some characteristics, such as income related information, had not been released when this Study was prepared, so estimates from other sources have been used.

Primary data sources, in addition to the 2000 Census, include prior year estimates from the U.S. Census Bureau, the Minnesota State Demographer’s Office, Claritas, Inc., an Arlington, VA-BASED data reporting service, and Woods & Poole Economics, Inc., a Washington, D.C.-based economic forecasting company.

Market Area Definition:

We have provided demographic data on population, households, income and other characteristics for the City of Aitkin, and for a primary market area that surrounds the City. The primary market area is referred to in the Study as the Aitkin Market Area. This market area includes the City of Aitkin, the Townships of Aitkin, Farm Island, Glen, Hazelton, Kimberly, Lakeside, Lee, Malmo, Nordland, Spencer and Wealthwood; and the Unorganized areas of Jewett and Northwest Aitkin.

A map showing the Aitkin Market Area is provided on the following page.

Although the geographic boundaries of this Market Area represent the Aitkin County jurisdictions immediately surrounding the City, housing in Aitkin has the potential to draw from a larger Market Area. As the medical, service and government center of Aitkin County, the City has the potential to attract residents from all of Aitkin County. The City is also close to the borders with Crow Wing County and Mille Lacs County, and these areas also represent a market draw area for the City. The inclusion of an Aitkin Market Area definition is intended to represent a primary area that is oriented to the City. The inclusion of demographic data for this area allows for some degree of comparison between the City and the surrounding jurisdictions. For most demographic characteristics, we have also included data for Aitkin County as a whole, to again provide a perspective on broader market conditions in the larger region.

Aitkin Market Area

Population Estimates and Trends

Table 1 Population Trends - 1980-2000

 

1980 Population

1990 Population

% Change 1980-1990

2000 Population

% Change 1990-2000

Aitkin

1,876

1,698

-9.5%

1,984

16.8%

Aitkin Market Area

6,581

6,311

-4.1%

8,075

28.0%

Aitkin County

13,404

12,425

-7.3%

15,301

23.1%

Source: U.S. Census Bureau

 ►          After experiencing a population loss of nearly 10% in the 1980s, Aitkin added population over the last 10 years. According to the Census, Aitkin added 286 people, for a population increase of nearly 17% between 1990 and 2000. However, adjusting for the population losses of the 1980s, the City’s population is 5.8% higher than in 1980.

►          It appears that some of the City’s population growth was due to annexation of existing housing units into the City limits from neighboring Aitkin Township during the last decade. City records indicate that approximately 51 people in 26 households were added through annexation. However, it is possible that this number was actually higher. During the 1990s, Aitkin Township lost 79 households and 214 people. Aitkin Township was the only township in the County to lose households during the 1990s, and it is reasonable to assume that annexation losses are responsible for much of this loss.

►          The jurisdictions forming the Aitkin Market Area showed similar growth patterns to the City of Aitkin. After losing more than 4% of its population in the 1980s, the Market Area experienced a population increase of 28% from 1990 to 2000.

►          Aitkin County has had similar patterns. After a population loss of more than 7% in the 1980s, the County added population at a rate greater than 23% from 1990 to 2000.

►          Although the 2000 Census data released to date does not show the components of population gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the Aitkin Market Area represents only a portion of the entire County, it is probable that the causes of population change are similar to County-wide patterns, with domestic in-migration as the largest component of population gain.

►          Although we consider the 2000 Census data to be the most reliable indicator of population levels, we have also obtained current-year population estimates from Claritas, Inc., a private data reporting service. The Claritas estimates for 2001 show an estimated population of 15,518 people in Aitkin County, and 8,070 for the Aitkin Market Area. These estimates are relatively consistent with the 2000 Census data.

►          We have also obtained a 2001 population estimate from Woods & Poole Economics, a private economic forecasting service. They estimate the Aitkin County population to be 14,550 people in 2001, well below the 2000 Census figures.


Population Projections:

The following table presents possible population level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward between 2000 and 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.

Table 2 Population Projections Through 2006

 

2000 Population

Census

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas Projection

2006 Woods & Poole Projection

 Aitkin

1,984

2,145

2,002

1,951

N/A

 Market Area

8,075

9,429

8,625

8,695

N/A

Aitkin County

15,301

17,426

15,951

16,611

15,190

Source: U.S. Census Bureau; Claritas, Inc.; Woods & Poole Economics, Inc.; Community Partners Research, Inc.

 ►          Population projections calculated from recent trends for the City of Aitkin differ depending on the inclusion of 1980s population data, when the City lost more than 9% of its total population. In the 1990s, population trends reversed, and the City added population, although some of this gain was due to annexation activity that added existing households from neighboring Aitkin Township. The projections provided above make some adjustment for past annexation activity, and do not anticipate similar gains from annexation in the next 5 years. Projections based on the last 10 years are probably overly optimistic, while those based on 20 year patterns may be too pessimistic. In our opinion, it is reasonable to assume that population growth over the 6 year period between 2000 and 2006 will be within the range between 18 people and 161 people.

►          Projections for the Aitkin Market Area and the County of Aitkin also vary depending on a 10 year versus 20 year calculation method. These methods anticipate that the Market Area will add between 550 and 1,354 people from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 651 and 2,125 people.

►          The Claritas projection for the City of Aitkin indicates a population increase of 64 people, on the lower end of the range provided above. Claritas starts with a lower base year estimate than the 2000 Census. So while they project some growth, they still show a lower overall population level than was reported in the 2000 Census. Claritas projects that the Market Area will add 625 people and that the County will add 1,093 people between 2001 and 2006. These projections are well within the ranges provided above.

►          Woods & Poole Economics projects that Aitkin County will add 640 people from 2001 to 2006. Again, they start with a lower base year estimate for 2001. While Woods & Poole’s estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Population By Age:

The following table compares the City, Market Area and County populations by age in 1990 and 2000, along with the percentage changes. While this table examines the changes over the last 10 years, the table on the following page compares the City, Market Area and County with the State of Minnesota for population by age.


Table 3 Persons by Age - 1990 - 2000


Age

City of Aitkin

Market Area

Aitkin County

1990

2000

% Change

1990

2000

% Change

1990

2000

% Change

 0-19

364

465

27.7%

1,501

1,831

22.0%

3,197

3,544

10.9%

20-24

55

97

76.4%

174

242

39.1%

359

486

35.4%

25-44

367

429

16.9%

1,461

1,691

15.7%

2,989

3,302

10.5%

45-64

270

350

29.6%

1,471

2,312

57.2%

2,952

4,452

50.8%

65-74

220

175

-20.5%

909

1,052

15.7%

1,730

1,993

15.2%

75-84

239

253

5.9%

558

639

14.5%

898

1,130

25.8%

 85+

183

215

17.5%

237

308

30.0%

300

394

31.3%

Total

1,698

1,984

16.8%

6,311

8,075

28.0%

12,425

15,301

23.1%

Source: U.S. Census; Community Partners Research, Inc.           

 ►          With strong overall population growth in the last decade, the City has experienced a population increase in all age groups except people 65 to 74 years old. While the City of Aitkin lost people in this senior citizen age range, both the Market Area and the County added people in these ages, probably reflecting the popularity of lakeshore living among retirees.

 ►          The largest percentage gain occurred in the age range between 20 and 24 years old, although this age group was a relatively small percentage of the overall population.

 ►          There was a large percentage increase in the population between 45 and 64 years old. Much of the “baby boom generation” was in this age cohort in 2000. In the Aitkin Market Area and in Aitkin County as a whole, these age ranges represented the largest percentage increases of all age cohorts.

 ►          Consistent with the growth of the population in the primary child-rearing age groups, Aitkin’s percentage of children has increased since 1990.


Population By Age - Comparison to Minnesota:

The following table compares the City, Market Area and County populations by age in 2000 to State-wide age distribution patterns.

Table 4 Persons by Age - 1990 - 2000


Age

Aitkin

Market Area

Aitkin County

Minnesota

2000

Percent

2000

Percent

2000

Percent

2000 Percent

 0-19

465

23.4%

1,831

22.7%

3,544

23.2%

29.1%

20-24

97

4.9%

242

3.0%

486

3.2%

6.6%

25-44

429

21.6%

1,691

20.9%

3,302

21.6%

30.5%

45-64

350

17.6%

2,312

28.6%

4,452

29.1%

21.7%

65-74

175

8.8%

1,052

13.0%

1,993

13.0%

6.0%

75-84

253

12.8%

639

7.9%

1,130

7.4%

4.3%

 85+

215

10.8%

308

3.8%

394

2.6%

1.7%

Total

1,984

100%

8,075

100%

15,301

100%

100%

Source: U.S. Census; Community Partners Research, Inc.

►          Although the City of Aitkin has had an increase in the number of children over the last decade, the City still trails the State in the percentage of children in the population.

►          The City’s percentage of population is lower for all age groups age 59 and younger. The City has a higher percentage of its population in all the age groups above age 60 than the State as a whole.

►          The City’s population of older senior citizens is much higher than the average. In the age ranges between 75 and 84 years old, the City’s percentage is nearly 3 times higher than the State-wide average. In the age ranges above 85 years old, the City’s percentage is more than 6 times greater than the Minnesota average.

►          While the extremely high percentages of senior citizens in Aitkin can be explained in part by the availability of senior housing and nursing home options, Aitkin County as a whole also has an above average percentage of senior citizens. In the senior age ranges above 65 years old, the County’s population percentage is nearly 2 times the State-wide average.

►          According to the 2000 Census, the median age in the City of Aitkin is 45.1 years and in the County it is 46.5 years old. For the entire State of Minnesota the median age is 35.4 years old.


Household Estimates and Trends:

Table 5 Household Trends - 1980-2000

 

1980 Households

1990 Households

% Change 1980-1990

2000 Households

% Change 1990-2000

Aitkin

765

769

0.5%

892

16.0%

Aitkin Market Area

2,568

2,667

3.9%

3,515

31.8%

Aitkin County

5,005

5,126

2.4%

6,644

29.6%

Source: U.S. Census Bureau; Community Partners Research, Inc.

►          After a decade of almost no household growth in the 1980s, the City of Aitkin experienced a household growth rate of 16% from 1990 to 2000. Again, an undetermined amount of this growth was due to annexation activity of existing houses from neighboring Aitkin Township. While City records only show annexation of 26 housing units, Aitkin Township lost 79 households during the last decade. Even with the growth caused by annexation, the City’s growth rate was much lower than the surrounding Market Area and the County as a whole.

►          Household growth in the Aitkin Market Area was very strong over the last decade. From 1990 to 2000, the Market Area added nearly 850 new households, or a household increase of nearly 32%. Most of the household growth in the Market Area occurred in the Townships of Farm Island, Hazelton, Norland and Lakeside, which offer a large number of lakeshore residential options.

►          Aitkin County’s household growth approached 30% in the 1990s. While all regions of the County added households, the majority of the household growth occurred in the jurisdictions that form the Aitkin Market Area.

►          Although the 2000 Census data released to date does not show the components of household gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the Aitkin Market Area represents only a portion of the entire County, it is probable that the causes of household change are similar to County-wide patterns, with domestic in-migration as the largest component of growth.


Average Household Size:

The following table provides U.S. Census Bureau information on average household size. We have also provided projections by Claritas, Inc., which were prepared prior to the release of any 2000 Census data.

Table 6 Average Number of Persons Per Household 1980-2006

 

1980 Census

1990 Census

2000 Census

2006 Projected Claritas

Aitkin

2.27

1.98

2.03

1.81

Aitkin Market Area

2.51

2.30

2.25

2.12

Aitkin County

2.65

2.39

2.28

2.21

Source: U.S. Census; Claritas, Inc.

►          In most areas in Minnesota and across the nation, average household size has been decreasing in recent decades. This has been due to household composition changes, such as more single parent families, more senior households due to longer life spans, etc. In the 1990s, the City of Aitkin reversed this trend as the average household size increased from 1.98 persons per household in 1990 to 2.03 persons in 2000. Despite this increase the average household size in the City is relatively small. For the State of Minnesota, the average household size was 2.52 people in 2000.

►          Average household sizes for the Market Area and for the County as a whole have continued to decrease in the 1980s and 1990s. Although the averages are higher than for the City of Aitkin, they are still well below the State-wide average.

►          The 2006 projection from Claritas shows that the average household size is expected to decrease over the next five years for the City, the Market Area and the County.

►          Woods & Poole projects that the Aitkin County average household size will decline from 2.35 persons per household in 2001 to 2.31 persons in 2006.


Household Projections:

The following table presents possible household level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward to 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.

Table 7 Household Projections Through 2006

 

2000 Household Estimate

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas, Inc. Projection

2006 Woods & Poole Projection

 Aitkin

892

958

926

979

N/A

Aitkin Market Area

3,515

4,186

3,904

4,020

N/A

Aitkin County

6,644

7,825

7,297

7,422

6,480

Source: Community Partners Research, Inc.; Claritas, Inc.

►          As identified previously, part of the reason for Aitkin’s household increases in the 1990's was due to annexation of existing households from Aitkin Township. The projections provided above make some adjustment for past annexation activity, and do not anticipate similar gains from annexation in the next 5 years. Our projections indicate that the City of Aitkin is expected to add between 34 and 66 new households between 2000 and 2006.

►          Projections for the Aitkin Market Area and the County of Aitkin vary depending on a 10 year versus 20 year calculation method. These two methods anticipate that the Market Area will add between 389 and 671 households from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 653 and 1,181 households.

►          The Claritas projection for the City of Aitkin indicates an increase of 54 households between 2001 and 2006, on the higher end of the range provided above. Claritas starts with a higher base year (2001) estimate than the 2000 Census. Claritas projects that the Market Area will add 361 households and that the County will add 622 households between 2001 and 2006. These projections are near the lower end of the ranges provided above.

►          Woods & Poole Economics projects that Aitkin County will add 430 households from 2000 to 2006. Woods & Poole’s base year estimate for 2000 is well below the County household count reported by the Census. While their estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Households By Age of Householder:

The following table compares Market Area households by age of householder in 1990 and 2000, along with the numeric and percentage changes.

Table 8 Market Area Households by Age - 1990 - 2000

Age of Householder

Aitkin Market Area

1990

2000

Numeric Change

Percentage Change

15-24

60

86

+26

43.3%

25-34

325

313

-12

-3.7%

35-44

425

571

+146

34.4%

45-54

361

599

+238

65.9%

55-64

419

661

+242

57.8%

65-74

573

673

+100

17.5%

75-84

368

442

+74

20.1%

 85+

136

170

+34

25.0%

Total

2,667

3,515

848

31.8%

Source: U.S. Census; Community Partners Research, Inc.

►          Census data show that the Aitkin Market Area has added households in most age ranges since 1990. The only age group showing a net loss of households was the 25 to 34 year old range which lost only 12 households between 1990 and 2000.

►          The largest numeric gains occurred in the 55 to 64 year old group and the 45 to 54 year old age group. Households in the ranges accounted for nearly 57% of all household changes.

►          All of the senior citizen age groups increased in size, with the number of households in the 85 and older range experiencing the largest percentage increase.


Household Characteristics:

The following table presents data on household characteristics from the 2000 Census. Data has been presented as percentages of the total households to allow for comparative analysis between the City, the Market Area and State.

Table 9 Households by Type - 2000

 

Married Couple Family

Male Householder

No Wife Present

Female Householder No Husband Present

Non-Family Household

With Related Children

W/O Related Children

With Related Children

W/O Related Children

With Related Children

W/O Related Children

1 Person Household

Non-Family Household

Aitkin

15.2%

21.3%

1.6%

0.8%

5.7%

4.0%

46.5%

4.8%

Market Area

17.5%

40.5%

1.5%

1.1%

3.6%

2.8%

29.0%

4.1%

Aitkin Co.

16.9%

40.5%

2.1%

1.3%

3.6%

2.6%

28.7%

4.2%

Minnesota

25.2%

28.5%

2.0%

1.6%

5.9%

3.0%

26.9%

6.9%

Source: 2000 Census; Community Partners Research, Inc.

►          According to the Census, Aitkin’s percentage of married couples with children was well below average when compared to the State of Minnesota. The City’s percentage of 1 person households was well above the comparable averages. A large number of 1 person households is common in communities with a large, older senior population.

►          While the Market Area and the County had a below average percentage of married couples with children when compared to the State-wide average, there was an above average percentage of married couples without children. This would be consistent with some of the surrounding township and unorganized area’s popularity as a retirement location.

Households by Tenure:

Table 10 Households by Tenure - 2000

 

Occupied Units

Owner-Occupied Units

% Owner Units

Renter-Occupied Units

% Rented Units

Aitkin

892

501

56.2%

391

43.8%

Aitkin Market Area

3,515

2,906

82.7%

609

17.3%

Aitkin County

6,644

5,676

85.4%

968

14.6%

Minnesota

1,895,127

1,412,865

74.6%

482,262

25.4%

Source: U.S. Census

►          According to the 2000 Census, the City of Aitkin had a below average percentage of owner-occupied housing when compared to the State of Minnesota. The City’s large percentage of rental units is somewhat typical of larger cities that serve as a regional center for a surrounding area. Aitkin is the retail, service and rental housing center for Aitkin County and provides much of the County’s rental housing.

►          Although the City has a high percentage of renter households, the jurisdictions that form the Aitkin Market Area have a high rate of owner-occupancy.

►          At the time of the 1990 Census, 56.3% of households owned their housing unit and 43.7% rented their housing. These percentages are almost identical to those reported in the 2000 Census.

►          For the Aitkin Market Area, the rate of owner-occupancy increased slightly over the last decade, from 81.7% in 1990 to 82.7% in 2000.

 ►          County-wide, the rate of owner-occupancy also increased, from 83.9% in 1990 to 85.4% in 2000. State-wide and Nation-wide the rates of owner-occupancy also increased during the 1990s.


Income Data:

Income data from the 2000 Census is not scheduled for release until 2002. Income data has been presented from a 2001 estimate of income calculated by Claritas, Inc., a national data reporting company. Income includes total money received in the stated calendar year by all household members 15 years old and over. The first table provides a median income estimate for all households, while the second table provides a median income estimate for all families that have more than one related individual living in the same household.

Table 11 Estimated Household Income - 1989 to 2001

 

Household Income

1989 Median

2001 Median

% Change

Aitkin

$14,744

$21,612

46.6%

Aitkin Market Area

$19,274

$28,141

46.0%

Aitkin County

$17,487

$26,494

51.5%

Source: Claritas, Inc.

Table 12 Estimated Family Income - 1989 to 2001

 

Family Income

1989 Median

2001 Median

% Change

Aitkin

$23,083

$31,750

37.5%

Aitkin Market Area

$24,453

$36,286

48.4%

Aitkin County

$21,836

$33,134

51.7%

Source: Claritas, Inc.

►          Using the commonly accepted standard that 30% of gross income can be applied to housing expenses without experiencing a cost burden, a median income household in the City of Aitkin could afford approximately $540 per month for ownership or rental, and a median income family could afford $794 per month.

►          The Aitkin Market Area’s median household income translates into a monthly housing affordability payment of $704. Using the mortgage affordability calculator of the National Association of Realtors, a household earning the Aitkin Market Area’s median household income of $28,141 can afford to purchase a house at approximately $60,000. This assumes relatively low fixed debt, $3,000 available for a down payment, and a 30 year fixed rate mortgage at 7.25%. A median income family, with identical terms but having higher fixed debt and $5,000 for a down payment can afford a $97,164 house. Closing costs have not been included in either calculation.

►          Household income estimates for 2001 indicate that approximately 21.4% of Aitkin Market Area households have incomes above $50,000. Households in this income range will generally have incomes sufficient for the costs associated with new home construction.


Existing Housing Inventory:

Table 13 Occupied Housing Units by Year Built

 

1939 and Earlier

1940-1959

1960-1979

1980-1989

1990-2000*

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Aitkin

234

93

85

10

90

160

24

73

29

54

Source: 1990 Census; Building Permits

* The tenure and occupancy status for units constructed since 1990 is not exactly known. This table assumes tenure based on the best available information on structure type, and from the City’s building permit records.

►          The owner-occupied housing stock in Aitkin is very old. The 1990 Census identified over 54% of the owner-occupied housing units at that time as pre-1940 construction. This was more than two times greater than the State-wide average for pre-1940 housing of approximately 25%. Only 17% of the owner-occupied stock was built after 1970.

►          Most of the City’s rental housing was built after 1970. The Census identified approximately 28% of the occupied rental units as pre-1940 built housing, and 67% as post-1970 built housing.

Table 14 Aitkin Housing Units By Number of Units & Tenure

 

Total Units - 1990

Owner Occupied 1990

Renter Occupied 1990

Unit changes 1990-2000

Total

Census+new units

1 Unit Detached

508

391

50

27

535

1 Unit Attached

6

4

1

0

6

2 Units

62

12

41

2

64

3-4 Units

43

1

30

0

43

5+ Units

248

8

204

54

302

Mobile Home

18

13

3

N/A

18

Total

885

429

329

83

968

Source: 1990 Census; Building Permits

►          Aitkin has had some new housing construction activity in most years over the last decade. For single family and duplex construction, the City averaged between 2 and 3 new units per year from 1990 through 2000.

►          The City has also had some multifamily construction over the last decade. In 1990, a 12 unit project was constructed. In 1998, 18 rental housing units were built, and in 2000, work began on a 24 unit rental housing project.

►          Only limited information is available on demolished units, but it appears that 2 houses were removed in the 1990s, and 2 older homes were moved in during the decade.


Permanent and Seasonal Housing:

Like many areas in northern Minnesota, the area surrounding Aitkin has a large number of seasonal use housing units. Increasingly, these seasonal use units are being converted to year-round housing units, to accommodate both retirees who are moving into the area, and also working age households who are looking to take advantage of the lakes, trees and other amenities of a wilderness housing location. The following table provides information on seasonal use housing units.

Table 15 Seasonal Use & Year-Round Occupied Housing Units - 2000

 


Total Units

Year-Round Occupancy Units

Seasonal Use Units

Units

Percent

Units

Percent

Aitkin

969

950

98.0%

19

2.0%

Aitkin Market Area

6,685

3,814

57.1%

2,871

42.9%

Aitkin County

14,168

7,499

52.9%

6,669

47.1%

Source: 2000 Census

►          Although there were only 15 seasonal use housing units identified within the City of Aitkin, seasonal use units make up nearly 43% of the stock in the Market Area, representing 2,871 housing units. The largest number of seasonal use units were in Farm Island Township, Hazelton Township, Norland Township, Glen Township and Lakeside Township. These five townships have accounted for most of the household growth that has occurred in the Aitkin Market Area.

►          Information from utility providers in northern Minnesota indicates that in some areas, as many as 5% of the seasonal use units are converted to year-round use on an annual basis. This conversion to year-round use allows for significant, permanent household growth in the area without a commensurate level of new housing construction activity. The availability of these seasonal use units in the surrounding rural areas also helps to explain the significantly higher household growth rates that the Market Areas are experiencing when compared to the Cities in the area.


Census Housing Vacancy:

The 2000 Census provided information on the occupancy/vacancy status at the time the Census was taken.

Table 16 Seasonal Use and Vacant Housing Units - 2000

 

Total Units

Total Vacant Units

Seasonal Use Vacant

Vacant For Rent

Vacant For Sale

Other Vacant

Aitkin

969

77

19

26

13

19

Market Area

6,685

3,170

2,871

40

32

227

Aitkin County

14,168

7,524

6,669

97

68

690

Source: 2000 Census

►          The Census reported that there were 26 vacant rental units and 13 vacant owner-occupied units in Aitkin at the time of the Census. This equates to a vacancy rate of 6.2% for rental housing and 2.5% for owner-occupied housing. State-wide, the 2000 vacancy rate was 4.1% for rental housing and 0.9% for owned housing according to the Census.

►          The Census lists a large number of “other vacant” units. The status of these units is not always defined. In some cases, these are units that are vacant temporarily due to turn-over, such as units that have been recently sold but the new owner has not yet moved in. It is possible that some of these units may also represent resort-type housing units. The largest number of “other vacant” units in Aitkin County are in Shamrock Township, with 207 such units. Shamrock Township includes much of the development on Big Sandy Lake.


Home Values:

Table 17 Estimated Owner Occupied House Value - 2001

 

2001 Median Home Value Estimate

Aitkin

$64,680

Source: Community Partners Research, Inc.; Aitkin County Assessor

►          Data on median owner-occupied home values is from the Aitkin County Assessor’s Office. Data was reviewed on 490 homesteaded houses. This data may include two and three-unit structures where the owner occupies one of the units in the building.

►          The median value in the Assessor’s data is $61,600, which represents the estimated market value in January 2001. Estimated market values are supposed to be within 95% of actual market value, but generally lag slightly behind true sales values. To adjust this value, we have increased the median value by 5%, bringing the current estimated median home value to $64,680.

County estimated market value data has also been used to analyze the number of homesteaded houses in the City that fall into defined value ranges. The first value range identifies the number and percentage of houses compared to $60,000, the approximate purchase amount that is considered affordable at the Aitkin Market Area median household income level of $28,141, with a $3,000 down payment. The second value range compares home values to $77,540, based on the purchase price limit for first-time home buyer programs available through the Minnesota Housing Finance Agency (MHFA).

Table 18 Owner-Occupied Houses By Specified Value Range - 2000

Value Range

Number of Homesteaded Houses

Percent of Homesteaded Houses

$0 - $60,000

Affordable at median household income

209

42.7%

$60,000+

Above affordable level at median income

281

57.3%

$0 - $77,540

Eligible for first-time buyer

321

65.5%

$77,540+

Above limits for first-time buyer

169

34.5%

Source: Aitkin County Assessor; Community Partners Research, Inc.

►          Based on home value estimates generated from County estimated market values, nearly 43% of the City’s existing single family housing stock is in a price range that is affordable to households at the Aitkin Market Area median household income level of $28,141, and more than 65% of houses are price-eligible for first-time home buyer mortgage programs.


Home Sales:

The previous page examined all owner-occupied houses in the City as an indicator of ownership affordability. This section examines those houses that have been sold within a recent 12 month time period. It is important to note that the number of houses that have sold is relatively small, and may not be an accurate indicator of overall home values. However, this sample does provide some insight into those units that are turning-over in the City.


Table 19 Median Value of Recent Residential Sales - June 2000 - May 2001

 

Number of Good Sales

Median Sale Price

Aitkin

36

$54,900

Source: Community Partners Research, Inc.; Aitkin County Assessor

►          In the 12 month period ending May 31, 2001, there were 36 improved residential sales of single family houses in Aitkin that were considered to be “arms length” transactions, according to the County Assessor. Sales that are not “arms length” include, but are not limited to, sales between relatives, forced sales and foreclosures, and estate transfers that are not available on the open market. Only the “arms length” transactions have been reviewed for this study.

►           The median sales price for the residential sales reviewed was $54,900. The highest valued sale was for $192,300 and the lowest valued sale for $8,800.

Table 20 Residential Sales By Specified Value Range - June 2000 - May 2001

Value Range

Number of Residential Sales

Percent of Residential Sales

$0 - $60,000

Affordable at median household income

20

55.6%

$60,000+

Above affordable level at median income

16

44.4%

$0 - $77,540

Eligible for first-time buyer

25

69.4%

$77,541+

Above first-time buyer limit

11

30.6%

Source: Aitkin County Assessor; Community Partners Research, Inc.
Note: This table reflects “qualified” sales as determined by the County Assessor. Sales for less than fair market
value have not been included.

►          Sales data show that more than 69% of the sales occurred in a price range that is eligible for first-time home buyer mortgage assistance through the MN Housing Finance Agency, and nearly 56% of recent sales occurred in a price range that is considered to be affordable to households at the Aitkin Market Area median household income level.


County-wide Home Sales - Historical Data:

The Minnesota Demographer’s Office has compiled County-level data on median home sales prices over the last 17 years to analyze price trends for single family houses. This data is only available for all of Aitkin County. The median sales price has been obtained from sales ratio reports submitted by the Aitkin County Assessor’s Office to the Minnesota Department of Revenue. It is important to note that houses sold in a given year may not be a statistically valid sample of all home values in the County. However, this annual sample does provide insight into home values over a number of years and information on those units that are turning-over in the County.

Table 21 Median Value of Residential Sales - 1984/85 to 1999/2000

 

Median Sale Price

Percent Change 1990-2000

Percent Change 1998/99-1999/2000

1984-1985

1989-1990

1995-1996

1998-1999

1999-2000

Aitkin County

$31,000

$32,250

$54,200

$70,000

$75,000

132.6%

7.1%

Minnesota

$64,000

$70,000

$87,500

$112,500

$124,500

77.9%

10.7%

Source: Minnesota State Demographer; Community Partners Research, Inc.

►          The median home sales price in Aitkin County has increased at a rapid rate over the last decade. From the 12 month period ending October 1, 1990 to the 12 month period ending October 1, 2000, the median sales price increased by nearly 133%. This percentage increase was well above the State-wide increase of approximately 80% during the same time period.

►          While the percentage increase is significant, it is explained in part by the relatively low median sales price in the County. The County’s median for the 1989-1990 sales period was $32,250. This was less than half of the State-wide median sales price in that year of $70,000.

►          For the 1989-1990 sales period, Aitkin County had the 31st lowest median sales value of 87 counties analyzed. For the 1999-2000 sales period, the County had the 44th lowest value of 87 counties reviewed.

►          The median income data for Aitkin County provided earlier in this Study estimate that the median household income level and the median family income level have increased by approximately 52% between 1989 and 2001. In this same time period the median home sales price has increased by nearly 133%.


Land and Infrastructure Availability:

In order to accommodate future housing development activity, the City will need adequate land suitable for residential development, and will need municipal sewer and water capacity sufficient to support additional residential users. While this study did not obtain independent verification of land or services availability, it did attempt to collect general information on the City’s physical ability to accommodate future residential growth. This information was most often obtained from either City staff or elected officials.


Land Availability - Single Family Development:

According to City officials, Aitkin has a limited supply of developed land that is available for new home construction. Most of the construction of single family homes that has occurred in recent years has been on lots remaining in two residential subdivisions developed in the late 1980s, or on other in-fill lots around the community.

A private developer had been planning an 11 lot residential subdivision, but due to the costs of providing public facilities and infrastructure, he has decided not to proceed.

To continue with future residential construction, the City will need a new residential subdivision created. Sewer and water service would need to be extended to serve a new residential area. The City would probably need to annex land for future development, although annexation has not been a problem in the past.


Land Availability - Multifamily Development:

At this time, there are few available sites for future multifamily development. The new rental project that is under construction used one of the only available sites. Future annexation activity may make additional locations available for higher density development. The site of the proposed 11 lot subdivision identified above will probably be re-zoned as commercial property, and may be a possible location for future multifamily construction. This site is along a major transportation artery, and is adjacent to commercial property uses. However, a conversion to a multifamily use may require another re-platting and re-zoning of the parcel.


Municipal Services:

According to City staff, improvements to the City’s public facilities systems are required. The sewage treatment plant and the treatment lagoon are in need of improvements. The City also needs a new water tower and a new well. At the time that water system improvements are made, the City hopes to add a water treatment plant.

Despite the need for improvements to the City’s sewer and water systems, the current infrastructure is capable of meeting near-term needs. The City will make improvements and upgrades over time, and public facilities are not viewed as a barrier to future development.


Rental Housing:

At the time of the 2000 Census, 43.8% of the occupied housing stock in Aitkin was rented housing. This represented 391 rental units. Aitkin’s percentage of rental housing was well above the State-wide average of 25.4%. As the largest City in the County, Aitkin has developed as the rental housing center for the larger, surrounding region.

At the time of the 1990 Census there were 336 occupied rental housing units in Aitkin. The 2000 Census reported 391 rental households, or 55 more occupied rental housing units than in 1990. Between 1990 and 2000, 54 rental housing units were added to the City through new construction, which would appear to account for nearly all of the increase in occupied units. However, the 1990 Census reported 57 vacant units that were available for rent, while the 2000 Census listed only 26 vacant units available for rent. Despite an increase of 54 units through new construction, the City experienced a net gain of only 24 rental housing units between 1990 and 2000.

If the Census data is correct, it would appear that Aitkin lost some of its existing rental housing units over the last decade. These units may have converted to owner-occupancy, or may have been removed from the rental stock for other reasons. Over the last decade, home prices have increased significantly in Aitkin. The analysis provided earlier in this Study indicates that median home sale prices County-wide have increased by nearly 133% between 1990 and 2000. Escalating prices for single family homes may have resulted in the sale of some single family homes that had previously been used as rental housing.


Rental Housing Survey:

As part of this housing study, a survey was conducted of multifamily buildings in the City. The survey included most of the larger rental buildings with 4 or more units. The survey focused on the largest rental properties in Aitkin. It is assumed that most future development will be oriented towards larger buildings and developments, and properties with 4 or more units offer the best comparison.

In the City of Aitkin, seven existing multifamily buildings were identified, along with one new construction project that had just started initial occupancy in August 2001. The seven existing buildings contain a total of 229 rental units in Aitkin, or approximately 55% of all rental units reported by the 2000 Census. One smaller landlord, with a combined total of 12 units, was also contacted as a sample of the 1 to 4 unit rental market. Including the small rental properties, and the new units at River Meadows, the survey collected information on more than 63% of all known rental housing in the City.

The survey was conducted by Community Partners Research, Inc., during the months of August and September 2001.


Market Rate Rental Summary:

Subsidized units are restricted with maximum income limits and/or maximum rent restrictions. Only two, true market rate multifamily properties were identified, Blackrock Terrace adjoining the hospital, and River Meadows, which completed construction in the summer of 2001.

The rental inventory table that follows also lists Riverplace Townhomes among the market rate properties. However, this project received assistance from the Greater MN Housing Fund, the Iron Range Resources and Rehabilitation Board, and from City Tax Increment Financing (TIF), and has income and rent limits for all units. While the subsidy sources have caused restrictions to be placed on the property, the rent levels are more comparable to the market rate segment of the local rental market, and the building has been included in this category for analysis.

A local Realtor, Tony Cummings, also owns 12 market rate rental units in Aitkin in smaller rental projects. These units have also been included in the market rate analysis. Additional market rate rental units exist in single family homes and other small structures, as well as above downtown buildings. We did not attempt to contact this segment of the market.

In total, information was collected on 105 market rate rental units.


Market Rate Occupancy/Vacancy:

We found no vacant units in the market rate segment, except for the new units at Riverplace Townhomes that had just come available for occupancy. All of the older, existing projects reported good demand for units and a high rate of occupancy.

The 24 units at Riverplace Townhomes had just started leasing in August 2001. In less than 1 month, the project had rented two-thirds of the available units. Five of the units that were vacant in early September were designated for low or moderate income households, as a requirement of the TIF contribution the project had received. Due to the rent levels and the income limits, the project had not been successful in finding tenants for these units.

The 2000 Census reported 26 vacant units available for rent, for an overall rental housing vacancy rate of 6.2%. Since our survey did not find this number of vacancies in the multifamily buildings and the subsidized projects, it would appear that some vacancies exist in the smaller, lower rent properties.


Rental Rates:

There is a great disparity between the quality and price of units in Aitkin. According to a local Realtor, units in single family homes, duplexes, and small rental projects will typically have a gross rent level between $450 and $525 for a two-bedroom unit.

Based on the units contacted, we believe that rental rates are in the following ranges:

            1 Bedroom - $350 to $640

            2 Bedroom - $425 to $750

            3 Bedroom - $685 to $715


Subsidized Summary:

Most of Aitkin’s larger apartment buildings have received some form of government subsidy. Most of these units were constructed in the 1970s when the federal government offered a number of “deep subsidy” programs to provide housing for lower income people.

The survey contacted five multifamily subsidized rental projects with a total of 160 units. Of these units, 32 are for general occupancy, and 128 are designated for occupancy by senior, handicapped or disabled households.


Occupancy/Vacancy:

We found only 1 vacant unit of the 160 subsidized multifamily units surveyed, for a vacancy rate of less than 1%. Even the one vacant unit that was identified may be better characterized as a turn-over unit. The manager had not been advertising the unit’s availability, and was using the vacancy as a chance to refurbish the unit. The manager was confident that the unit could be leased quickly once it was advertised as available.

The Section 8 Existing Rent Assistance Program also provides subsidized housing. This program provides tenant-based rent assistance and can be used in any suitable rental unit in Aitkin County. The Aitkin HRA manages the program and has 34 households receiving rent assistance in Aitkin County and Mille Lacs County. Of these 34 households in two Counties, 21 households are living in the City of Aitkin.

Subsidized Rental Rates:

Most of the subsidized projects have rent assistance or other “deep” subsidy sources that allow rent based on 30% of the tenant household’s income. Some of the Rural Development subsidized properties do not have sufficient rent assistance to allow all tenants to pay 30% of income. In these cases, the tenant households pay 30% of income but not less than the basic rent amount or more than the market rent amount. The basic/market rent levels in Aitkin are in the range as follows:

                                             Basic Rent Range                 Market Rent Range

            One Bedroom:             $300 - $325                              $415 - $505

            Two Bedroom:             $345 - $350                              $455 - $545


Tax Credit Rental Housing:

Over the last decade, the largest production subsidy through the federal government has been low income housing tax credits, also known as Section 42 housing. Without the availability of additional subsidies, tax credits provide rental housing that is affordable for moderate income households.

Our research found only one rental project in Aitkin that had utilized tax credits. River Heights, constructed in 1992, combined tax credits with Rural Development subsidies. The availability of rent assistance through Rural Development has made this project affordable for very low income people, and information on these units has been included with the subsidized summary.

Table 22 Aitkin Multifamily Rental Housing Inventory

Name

Number of Units/ Bedroom Mix

Rent

Vacancy/

Wait List

Tenant Mix

Comments

Market Rate


Blackrock Terrace

1 Bedroom

 2 Bedroom

51 units total

$618

$692-$724

+ electric


No vacancies


Senior occupancy

Senior apartments built in 1988 adjoining the hospital. Originally developed and owned by hospital but later sold to private owner. Independent living units - any services are contracted privately by tenant. Emergency call buttons ring in to paramedic.



River Meadows


5 - 1 Bedroom

12 - 2 Bedroom

7 - 3 Bedroom


$559

$618

$685

inc. heat and electric


Initial occupancy phase -

 2/3 leased



General occupancy

New market rate apartment project constructed in 2001. Initial occupancy in August 2001. Within 1 month, building was 2/3 occupied according to manager. City TIF assistance requires that 5 units are income designated for low/moderate income. Units have fireplaces. Heat and electric included in rent. Garages available for $40/month. Two and three bedrooms are leasing faster than one bedrooms.


 Riverplace Townhomes


12 - 2 Bedroom

6 - 3 Bedroom


$560

$615

+ all utilities


No vacancies, waiting list

General occupancy, but most tenants are seniors

General occupancy apartments constructed in 1998. Assistance includes Greater MN Housing Fund, City TIF contribution and IRRRB contribution. Units have income restrictions and rent limits. Only 3 younger family tenants, remainder are senior citizens. Tenants pay all utilities in addition to contract rent. Waiting list exists.


Cummings Rentals

12 total units in single family houses, duplexes, and quad

rent varies

$425-$450 prevailing for 2 bedroom


No vacancies


General occupancy

Aitkin area landlord with 12 market rate units in single family homes, duplexes, and a 4-unit apartment building. He reports good demand for units. Prevailing rent is $425 to $450 for a two-bedroom unit. Multifamily apartments include heat in rent, single family/duplex tenants pay heat in addition to rent.

Subsidized



Aitkin Manor



39 - 1 Bedroom

1 - 2 Bedroom




30% of income



1 vacant unit



Senior, HC, Disabled

HUD 221(d)(3) insured mortgage with Section 8rent assistance, so tenants pay rent based on 30% of income. Apartments constructed in 1979 and designated for senior occupancy. Manager reports that vacant unit is due to recent turn-over, and unit is being refurbished while vacant. 15 name waiting list for occupancy, so unit is not expected to remain vacant for long.

Name

Number of Units/ Bedroom Mix

Rent

Vacancy/

Wait List

Tenant Mix

Comments


Maryhill Manor


60 - 1 Bedroom

30% of income

flat rent of $375

No vacancies, short waiting list


Senior, HC, Disabled

HUD Public Housing apartments for senior, handicap and disabled occupancy built in 1969 . Tenants pay 30% of income for rent. Flat rent of $375 for moderate income households. No vacancies and short wait list for occupancy.


Ripple River Town Homes


22 - 2 Bedroom

10 - 3 Bedroom


30% of income


No vacancies, waiting list


General occupancy

MHFA/Section 8 subsidized general occupancy units built in late 1970s. All tenants receive rent assistance based on 30% of income. Manager reports strong demand, especially for 3-bedroom units. As many as 50 applicants rejected this year due to bad credit/rental history. Current waiting list is 5-6 names.



River Heights


3 - 1 Bedroom

9 - 2 Bedroom


$300-$505

$350-$545

30% of income


No vacancies, waiting list


General occupancy

Rural Development/Tax Credits subsidized apartments for general occupancy built in 1992. 10 of 12 units have rent assistance with remaining units paying no less than basic rent or more than market rents listed. Manager reports good demand for units. No vacant units with a 4 name waiting list



Village Apartments



2 - 1 Bedroom

14 - 2 Bedroom



$325-$415

$345-$455

or 30% of income



No vacancies, waiting list



Senior Occupancy

Senior designated apartments subsidized through Rural Development. Two 8 unit buildings constructed in 1975-1976. 13 units have rent assistance with remaining units paying no less than basic rent or more than market rents listed. Owner reports very good occupancy history, due to availability of 2-bedroom units for seniors. Currently maintains 6 name waiting list for occupancy.

Section 8 Existing Program

21 households in City of Aitkin

30% of income


N/A

General occupancy

Section 8 Existing Program serves Aitkin County and Mille Lacs County. Currently 34 households in both Counties are receiving assistance, with 21 of these households in the City of Aitkin.

Source: Community Partners Research, Inc.

City of Aitkin

Findings and Recommendations:

Key Statistics:

The first number represents the City of Aitkin/the second number, when provided, is for the Aitkin Market Area which includes the City of Aitkin, the Townships of Aitkin, Farm Island, Glen, Hazelton, Kimberly, Lakeside, Lee, Malmo, Nordland, Spencer and Wealthwood; and the Unorganized areas of Jewett and Northwest Aitkin.

2000 Population = 1,984/8,075

2000 Households = 892/3,515

Projected household changes from 2000 to 2006 = 50 to 55 households in Aitkin

Projected household changes from 2000 to 2006 = 450 to 530 households Market Area

2000 tenure rates = 56.2% owner, 43.8% renter

2001 Median owner-occupied house value = $64,680

Median value of recent sales = $54,900 (36 sales)

2001 Median Household Income = $21,612/$28,141

2001 Median Family Income = $31,750/36,286

2000 Average number of persons per household = 2.03/2.25

Monthly rent payment ability (Market Area median income household) = $704

Affordable rent payment ability (50%of Market Area median income) = $352

Affordable ownership (Market Area median income household) = $60,000

Affordable Ownership (Market Area median income family) = $97,164


Growth Projections:

Both the City of Aitkin and the surrounding rural areas that form the Aitkin Market Area, as defined in this Study, have prospered over the last decade. After experiencing population losses and relatively stagnant household growth during the 1980s, nearly all of the jurisdictions around Aitkin rebounded during the 1990s, adding a substantial number of households and population. The percentage growth in households approached 32% for the area defined as the Aitkin Market Area. While most of this growth occurred in the township areas around Aitkin that offer highly desirable lake shore residential options, all of the jurisdictions experienced some degree of growth, with the exception of Aitkin Township, which appears to have lost households because of annexation activity by the City of Aitkin.

Our traditional projection methods yield a wide variation in the growth potential for the City and the Market Area through 2006. The 1990s were extremely strong economic years for the nation, and part of the population rebound in Aitkin County and much of Greater Minnesota can be attributed to strong growth in employment, wages and wealth. A prolonged economic slow-down or recession could alter the growth patterns that became established in the area in the 1990s.

Much of the growth in the Townships around Aitkin can be attributed to the popularity of lake shore living. The Townships of Farm Island, Hazelton, Nordland and Lakeside had the highest numeric growth in households. These four Townships still had 1,881 seasonal use residential units at the time of the 2000 Census. This large inventory of seasonal use housing still offers significant potential for conversion or re-use as year-round housing, and the prospect that an increase in permanent residents can be expected for the foreseeable future.

The near-term projections for household growth that we have used for this Study anticipate that growth will continue to occur although at a slower pace than experienced over the last decade. We believe that household growth in the City of Aitkin will be approximately 50 to 55 additional households between 2000 and 2006, or an annual average of 8 or 9 new households per year.

For the Aitkin Market Area, we would expect 450 to 530 permanent households to be added between 2000 and 2006, or an annual average of 75 to 88 additional households. We would expect that some of this household growth will utilize existing, seasonal-use housing units, and this growth will not require a commensurate level of new unit construction.

We are projecting slower household growth in the near-future for three primary reasons. First, some of the household gains over the last decade were due to the availability of lower-cost housing units. After population and household losses in the 1980s, there were housing units available for sale or rent in the early part of the last decade. These units were available and affordable to new households that were looking to move into the Aitkin area. For example, the 2000 Census reported nearly 100 fewer vacant units for sale or rent in 2000 than existed in the 1990 Census. As the supply of vacant units has decreased, many households will find it more difficult to move into the area in an affordable housing unit. Second, the availability of prime lakeshore sites continues to decline in Aitkin County. The availability of high-amenity sites in the townships surrounding Aitkin has been one of the primary factors generating strong household growth over the last decade. As the number of prime sites decreases, and the price of sites increases, there will be fewer opportunities in the immediate area to attract new residents. The third reason for slightly reduced growth rates is the economy, both locally and regionally. The 1990s represented one of the strongest periods of economic growth in our nation’s history. As documented in the Employment and Local Economic Trends section of this Study, Aitkin County shared in this economic growth through job creation and gains in average wages. With a slowing economy in recent years, we would expect less growth in the near-term generated by employment opportunities in the immediate area.

With relatively strong household growth projected through 2006 for the area forming the Aitkin Market Area, we would expect to see stable to increasing numbers of households in all of the age ranges. However, changes in the number of households will be most pronounced in certain age groups, due to both an aging of the existing population, and the most likely profile of new households moving into the area. Changes in the percentage of households in different age ranges will have an impact on housing demand.

The most significant increases by age group that are projected to occur by 2006 will be among households age 55 to 59 years old. The number of households in the 60 to 64 year old range, and the 65 to 69 year old range is also expected to grow. This would be very consistent with the area’s popularity as a retirement or semi-retirement location. Households in these age ranges tend to be predominantly home owners and will probably be looking for high amenity housing locations, such as lakeshore sites. The growth expected in these age ranges will primarily demand owner-occupied housing production. As households in these age groups grow older, they may increasingly look for lower maintenance housing options, such as townhouse developments, that fit with their lifestyle.

There is also a projected increase among households age 25 to 34 years old. Households in the younger age ranges tend to rent with much greater frequency, and also form the majority of first time home buyer households.

Another age cohort that is projected to grow in Aitkin Market Area is the older senior age groups, age 80 and older. The number of households age 80 and older is expected to increase by approximately 10% by the year 2006. While this represents a significant percentage gain, the actual numeric gain in the Aitkin Market Area is projected to be between 40 and 50 additional households in this age range.

Households above 80 years in age tend to rent with greater frequency as they age, and they increasingly look for alternative housing options to meet their life-cycle housing needs. The Aitkin Market Area already has an above average number of older seniors, and growth in this segment of the population will generate some additional housing demand. The City of Aitkin does have some life-cycle housing options, including senior-designated apartment units, senior housing with services options and nursing home units.

The number of senior households in the age ranges between 70 years old and 79 years old is expected to increase slightly through 2006. However, in the longer-term, this segment of the population is expected to grow at a faster rate, as the large number of households in their late 50's and 60's continue to age and move into the 70+ age ranges.

These growth projections will be incorporated into the specific housing recommendations that follow.


Strengths For Housing Development:

The following strengths of the community were identified through statistical data, local interviews, previous research and on-site review of the local housing stock.

►          Aitkin is the largest City, County-seat and small regional center for the surrounding Market Area - As the largest City in Aitkin County, Aitkin is a regional center for the surrounding area. Aitkin has a majority of the retail, services and professional offerings for the immediate trade area.

►          Aitkin has a hospital, nursing homes and skilled medical services available - These facilities contribute greatly to the community’s viability. The presence of these facilities has made Aitkin a desirable location for seniors - who would otherwise leave the community as health concerns increase with age.

►          Attractive location for seniors - As the regional center, and with the medical services, Aitkin is the preferred location for senior citizens. The percentage of seniors in the population is well above the State-wide average.

►          IRRRB eligible - The Iron Range Resources and Rehabilitation Board is becoming less involved in housing development than they have been in past years, but they remain a valuable resource for economic and community development in the area.

►          New industrial park - The City has a relatively new industrial park which is home to a recent expansion of Aitkin Iron Works. Additional land is available for future industrial development.

►          Affordable existing housing stock - Many of the existing single-family houses in Aitkin are very affordable, priced at $70,000.00 or less. However, most of these houses are older, and may need maintenance and rehabilitation to remain desirable options.

►          Increasingly diverse housing stock - Aitkin has the most diverse housing stock of any City in Aitkin County, offering life-cycle housing options for residents as they age. The City has an above average supply of rental housing, including a large number of subsidized housing options.

►          Active housing developers - During the time this Study was conducted, there was a private rental housing project under construction, and additional planning was being done for two senior housing with services projects.

►          Proximity to tourism and recreational areas - Aitkin is close to a number of desirable recreational lake opportunities, including Lake Mille Lacs and the Brainerd Lakes Area. Smaller recreational lakes in the Market Area have had a major impact on the area’s growth over the last decade. These high-amenity locations not only attract permanent residents, but they also add to the quality of life for all local residents and add to the tourism economy.


Barriers or Limitations to Housing Activities:

Our research also identified the following barriers, or limitations, that hinder or prevent certain housing activities in the City of Aitkin.

►          Competition with other jurisdictions - Although the area has grown at a fast rate, most of this growth has occurred outside of the City limits, in the surrounding townships. This is especially true of higher valued homes and higher income households. While Aitkin still benefits economically, the City does not capture the expanded tax base resulting from this rural growth.

►          Aging Population - Aitkin’s median age of 45.1 years is well above the State-wide average of 35.4 years old. The City has a high percentage of senior citizens in the population. While this has many positive impacts on the community, it also has an impact on housing development and market potential for certain kinds of housing.

►          Value Gap Deters New Owner-Occupied Construction - Based on market values for property taxes and recent residential sales, we estimate that the median priced home in Aitkin is valued at $55,000 to $65,000. This is well below the comparable cost for new housing construction, which will generally be well above $100,000.00 for a stick-built house with commonly expected amenities. This creates a significant “value gap” between new construction and existing homes. This is an obvious disincentive for any type of speculative building, but also serves to deter customized construction, unless the owner is willing to accept a potential loss on their investment.

►          Age of the Housing Stock - While the existing stock is very affordable, much of it is very old and may need substantial improvement to meet expectations of potential buyers. Units lost to deterioration or obsolescence cannot be replaced in a similar price range.

►          Staff Capacity Limitations - The City operates with limited personnel. It is very difficult for existing staff with current responsibilities to develop new housing initiatives. The County HRA is also available to assist the City but also has limited staff availability to initiate new projects.

►          Economic difficulties - Although the City’s economy has improved over much of the last decade, the County’s unemployment rate was more than double the State-wide rate in 2000.

►          Lower incomes limit housing choices - Income estimates for Aitkin and the surrounding market areas indicate that incomes are relatively low. The Market Area’s estimated median household income for 2001, $28,141, translates into an approximate ownership affordability level of $60,000, and an affordable rent level between $352 and $704 per month. While these affordability levels match up well with prices for existing housing in the City, they are generally not well matched to the prices for new housing construction.

►          Limited land availability - Aitkin has only a limited supply of improved land for residential development. Although land can be annexed, the cost of providing public utilities may be cost prohibitive for some types of housing development.


Recommendations, Strategies and Housing Market Opportunities:

Based on the research contained in this study, and the housing strengths and barriers identified above, we believe that the following recommendations are realistic options for the City of Aitkin. They are based on the following strategies:

►          Rental housing development is a market strength - Although Aitkin already has an above average number of rental housing units, the City is the most logical location in Aitkin County for future rental housing construction. The City is the retail, service, employment and government center for the County and a larger trade area, making the community the best location for future development. Since 1960, approximately two-thirds of all housing developed in the City of Aitkin has been for renter occupancy.

►          Focus heavily on the preservation, maintenance and improvement of the housing stock that already exists in the City - While some housing construction will occur in coming years, most of the housing opportunities will continue to be provided by the housing stock that is already on the ground. This is especially important for affordable housing opportunities, as it will almost always be less expensive to offer an affordable unit through rehabilitation versus new construction. Units that are lost due to deterioration and obsolescence cannot be replaced for a similar price. Evidence suggests that the existing stock is generally being well maintained, especially considering the age of the housing. Emphasis on continued improvement will be important to meet future housing needs.

►          Promote “appropriate” or life-cycle housing development - With moderate incomes in the Area, it will be difficult, if not impossible, to take moderate income families and provide ownership housing through new construction, unless some forms of subsidy are used. For example, a young family with a $28,000 income, would not typically be a candidate for a new single family house, which would probably have a construction cost above $100,000. A better strategy would be to promote the construction of low maintenance/no maintenance housing options targeted at seniors. Senior households living in a single family house may consider a no maintenance option as desirable, and in the process, sell their single family house to a moderate income family. By making additions to the overall housing stock through addressing specific sub-markets, the overall availability of housing can be improved.

►          Promote home ownership - Home ownership is the preferred option for most households. Home ownership assists in creating community stability and commitment to the community. Aitkin has a high number of renter households. While many of these renters are seniors, who do not wish to own a home, there are also many younger families that are renting their housing. These households may be interested in home ownership, if an affordable opportunity is available.

►          The market for new housing development will generally not occur without proactive community involvement - Much of the housing development that occurred in the recent past has involved some form of public involvement or subsidy. Most of the City’s rental housing has received public assistance, from TIF to grants. To compete in the home ownership segment of the market, public involvement may also be required. The City has generally been at a competitive disadvantage compared to the surrounding townships when it comes to new home construction. To attract a substantial amount of new home construction in the City of Aitkin, subsidies or other assistance will probably be required.

►          Take advantage of housing subsidy opportunities - In addition to competing more successfully with rural locations, some form of public subsidy will probably be required to make new housing development affordable for low and moderate income residents. With relatively low incomes in the area, new home construction is beyond the financial means of most area households.

►          Prioritize community housing goals - Many of the recommendations in this Study will require staff-intensive efforts. The City should prioritize its housing plans and should establish goals to achieve its plan.


Recommendations:

The following recommended actions have been divided into the following categories:

►          Rental Housing Initiatives

►          Single Family Housing and Home Ownership Initiatives

►          Redevelopment Initiatives

►          Other Housing Issues


Rental Housing Initiatives:

Overview: As mentioned previously, Aitkin’s greatest housing development success in recent years has been in rental housing construction. In the early 1990s, a 12 unit rental project was built, followed by an 18 unit development in 1998. In the late summer of 2001, construction was completed on 24 units of rental housing. While 54 units of multifamily rental housing have been constructed in the City since 1990, only 29 units of owner-occupied housing has been built in this same time period.

Based on Census Bureau records, it appears that over two-thirds of the units in Aitkin that have been constructed since 1960 have been for rental occupancy. According to the 2000 Census, nearly 44% of all occupied housing in the City is rental housing. This is well above the State-wide average of approximately 25%.

Aitkin has been the logical location for rental housing construction in Aitkin County. It is the retail, service, employment and government center for the County. The high percentage of rental units has also occurred because of the tendency for most home owners to look for ownership options outside of the City limits on the lake shore and wilderness locations in the surrounding townships. The rate of owner-occupancy in the townships that surround Aitkin is approximately 92%.

In addition to the rental projects that have been recently constructed, we have learned of three possible rental housing developments in the near-future. We did not learn of any proposed developments for owner-occupied housing in the City.

Our survey of housing vacancy rates found only 1 available unit in the City’s larger multifamily buildings, for a vacancy rate of less than .5%. The 2000 Census reported a rental housing vacancy rate of 6.2%. Since most of the multifamily projects reported strong occupancy histories, it would appear that the vacancies that existed in 2000 were in the smaller rental projects around the City. As many as 120 rental units exist in single family houses, mobile homes, duplexes and 3 or 4 unit buildings. It is our assumption that some vacancies still do exist in this segment of the market. However, given the high rate of occupancy in the multifamily buildings, we also assume that vacancies that do exist may be in poor quality or substandard rental units.

There is enough demand for affordable rental housing that we believe that units that are vacant are vacant for a reason - probably poor condition and quality. Despite the vacancies reported in the Census, we believe that additional rental housing construction will be needed in Aitkin in the future.

Our projections indicate that Aitkin can expect continued household growth over our projection period through 2006. We believe that the City can expect to add between 50 and 55 new households from 2000 to 2006, or an annual average of 8 or 9 new households per year. During this same time period, we would expect that the jurisdictions defined as the Aitkin Market Area in this Study will add between 450 to 530 additional households, or an annual average of 75 to 88 new household per year.

Based on past tenure patterns in the area, we would expect the projected growth in households to create demand for between 24 and 38 additional rental housing units. The recent construction of a 24 unit project in Aitkin has addressed much of this growth-generated demand, although these units primarily serve the moderate to higher income segment of the market.

We also believe that additional pent-up demand exists for rental housing in Aitkin. The better quality rental properties in the City have a vacancy rate of less than 1%. The City’s newest rental project, River Meadows, has just opened and has leased approximately two-thirds of its 24 units within the first month. This absorption of new units does not appear to have increased the vacancy rates in the City’s other apartment buildings, indicating that pent-up demand exists. To achieve a vacancy rate of between 3% and 5% in the multifamily rental stock, which is still considered to be a healthy rental market, an additional 12 to 20 units could be developed. This would help to create a market that allows for more tenant movement and choice of units. This would also allow new households wishing to move into Aitkin the opportunity to gain immediate access to a desirable living unit.

Finally, there will need to be some level of new unit production to replace units that are lost from the existing rental market. Reconciling 1990 and 2000 Census tabulations on rental housing indicates that as many as 30 rental housing units have been lost over the last decade, or approximately 3 units per year. Some of these units may have been lost to deterioration. Some single family rental houses were probably converted to owner-occupancy as home price increases made it profitable for landlords to sell some of their rental units. To replace lost or substandard units, we would estimate that between 12 and 15 additional units could be created between 2000 and 2006.

The anticipated demand for new rental housing as calculated through these methods would indicate adequate demand for between 48 and 73 additional rental housing units between 2000 and 2006. The construction of 24 units at the River Meadows project has helped to address some of this near-term demand.

The following recommendations identify our opinions on future rental housing development in Aitkin. It is important to note that the recommendations for development are through the year 2006. We would recommend that new rental housing be phased in to assure market acceptance of new units and to minimize the saturation that could occur if too many units are brought into the market at one time. As each recommendation is implemented it will be important to monitor the impact on area vacancy rates before proceeding with additional development.

1.         Monitor the near-term need for additional market rate rental units

Findings: Aitkin has three rental projects that provide high quality, market rate rental housing. Blackrock Terrace is the largest of these projects, with 51 units. This project is identified as a “senior community” and is attached to the current City hospital. Although physically attached to the hospital, Blackrock Terrace provides independent living apartment units and patio units for senior citizens.

A second project, River Place Townhomes, was constructed in 1998. This building is general occupancy housing, but most of the units are currently occupied by senior citizens. While we have identified this building as market rate, some of the subsidy sources used in the project financing have triggered maximum income limits and maximum rental rates for the building. However, these limits are pegged to 80% of the estimated State-wide median income level, so they are sufficiently high that many Aitkin area households are income eligible. For a two-person household, the maximum income limit for occupancy would be $40,000 in 2001, and for a four-person family, the income limit would be $50,000. While this does restrict some area renters from living in the building, the income limits serve most area renters, particularly seniors that may have a large asset base, but a moderate annual income.

The City’s newest market rate project, River Meadows, opened for occupancy in August 2001. Within the first month, approximately two-thirds of the units had been leased, according to the property’s manager. Five of the units have income limits for occupancy as a condition of the Tax Increment Financing assistance that was provided to the property. None of the income based units have been leased.

The highest rental rate units in the City are those at Blackrock Terrace. The gross monthly rental rate for a 2 bedroom unit in this project exceeds $700. Although this building offers independent living, the property’s location next to the hospital, the presence of emergency call buttons, and other amenities offered by the building make this a highly desirable location for older senior citizens. Many of the older senior citizens who live in the building are willing to pay rent well above the prevailing rates in Aitkin for the security offered in Blackrock Terrace.

Gross rental rates at the newest property, River Meadows, are approximately $620 for a two bedroom unit and approximately $720 for a three bedroom unit. While these rent levels are well above the rates charged by most rental properties in Aitkin, they are very attractive rates for newly constructed units. According to the manager, the project has been well received. The larger two and three bedroom units, in particular, have leased quickly. Within one month of initial occupancy, 6 of the 7 three bedroom units in River Meadows had been leased.

Recommendation: We believe that the recent introduction of 24 high quality, market rate rental units in Aitkin will adequately address the near-term need for this type of rental housing. The units in the three rental projects outlined above provide the City with a total of 93 units of high quality rental housing. Additionally, other rental housing in the City, in single family homes, duplexes, and 3 and 4 unit buildings also offer good quality market rate opportunities.

As the City continues to grow over the next five years, we believe there will be additional opportunities for the development of higher rent housing. We would recommend that the occupancy patterns in the three market rate apartment buildings be monitored to determine when adequate demand exists for additional units.

The owners of River Place Townhomes have tentative plans to develop six additional three bedroom units as part of a new phase of development at their project. With the successful

lease-up of three bedroom units at both River Place Townhomes and River Meadows, the development of 6 additional units would be a good addition to the City’s rental stock within the next few years, provided that the initial occupancy patterns at River Meadows remain strong.

The owners of River Meadows are also in a good position to develop a second phase of that project. According to the manager, the site has adequate land for additional units. As occupancy stabilizes in this property, the owners will be in a good position to assess the demand for more units.

Both River Place Townhomes and River Meadows utilized City Tax Increment Financing assistance in their projects. It is probable that an equal or greater City involvement would be needed for the creation of additional units. Recent Legislative changes to tax rates may make TIF a less attractive tool for assisting development. The River Place Townhomes project also utilized subsidies from the Greater Minnesota Housing Fund (GMHF) and the Iron Range Resources and Rehabilitation Board (IRRRB). Over the past year, IRRRB has become less involved in housing development projects. GMHF has placed greater emphasis on housing development in areas of high job growth and low unemployment. Without access to these types of development subsidies, it is doubtful that a second phase could be developed at River Place Townhomes that could offer competitive rents.

2.         Support the proposed assisted living projects to address the needs of seniors requiring services with their housing

Findings: Aitkin is the medical and service center for the Aitkin County. This helps to account for the City’s large senior population, who consider the City to be a preferred residential location as their needs for services increase. For senior life-cycle housing, Aitkin has senior-designated subsidized rental housing, senior-designated market rate housing, and two nursing homes. The City does not currently have any projects that provide housing with services for senior citizens.

There is only one senior project in all of Aitkin County that currently offers a housing with services option. Hill Lake Manor in Hill City has had persistent vacancy problems. In 2001, the Aitkin County HRA began offering an assisted living option in this building. However, to date there has been very little use of this option.

The 2000 Census data shows that there are 643 people in the City of Aitkin age 65 years old or older. Approximately 148 of these people live in the nursing homes in the City. In the Aitkin Market Area there are 1,999 people age 65 years old or older, and in all of Aitkin County there are 3,517 people 65 years old or older. These senior citizens form the primary target market for assisted living housing units. Our projection sources indicate that the number of seniors should continue to increase through the year 2006, the end of our projection period.

There are two proposed developments that would provide assisted living units for seniors. The hospital is planning to build a new facility and to convert the existing hospital to assisted living units. They have completed their own study for the project that recommended 25 total units. Fifteen of the units would provide assisted living for seniors, and 10 units would provide assisted living with a higher level of services.

Lutheran Social Services and the Kellar Foundation are also proposing an assisted living development that would provide 16 beds. This project would be constructed as part of the second phase of development at the River Place Townhouse site.

If both of these projects are developed, they would provide 41 assisted living units. To achieve full occupancy, the proposed projects will need to attract 2.2% of all the senior citizens in the market area that are not currently living in a nursing home. This is a very achievable penetration rate. Since this development will actually serve a larger market area, which may include much of Aitkin County, the market penetration rate will need to be even lower.

Recommendation: We believe that senior housing with services options are an important and necessary addition to the City of Aitkin. The two proposed developments will add a housing type that does not currently exist in the City. It will add to the life-cycle mix of housing in the community, and provide the large senior population with an additional choice of housing in the community as they age.

We would recommend that the City support the development of both of these projects. We also believe that additional demand may exist for senior housing with services. Both of these projects appear to be catering to a frail senior population that needs an extensive menu of services to assist with daily living. A housing option that provides a less-intensive mix of services would also be appropriate for the community. A congregate senior project that had daily meals, light house keeping and similar low intensity services that allows seniors to live independently would help to complete the life-cycle options for seniors. However, before proceeding with any such development, we would recommend that the two proposed developments be constructed to determine the level of services that each of these projects will provide, and to analyze the market acceptance of these developments.

3.         Promote the development of 10 to 12 units of tax credit moderate income rental housing

Findings: Low income housing tax credits are one of the few federal incentives still available for the production of affordable rental housing. Although it is nearly impossible to construct “deep subsidy” rental units that allow tenant rent to be based on income, tax credits provide a “shallow subsidy” that allows for units to rent at below-market rates. Other Iron Range communities have developed rental units to serve the low and moderate income rental market using federal low income housing tax credits, IRRRB contributions and other resources. For example, a tax credit rental project constructed in Grand Rapids in 1998 was able to keep rent levels under $400 for two bedroom units, and under $450 for three bedroom units. This project leased quickly and has been very popular in the Grand Rapids rental market.

The major draw-back to the use of tax credits is that the units will have income limits for occupancy. For tax credit projects that serve households at 60% of median family income, the 2001 income limits are as follows:

                        1 person household - $19,800

                        2 person household - $22,620

                        3 person household - $25,440

                        4 person household - $28,260

                        5 person household - $30,540

                        6 person household - $32,760


The maximum gross rents in 2001 for households at 60% of median are:

                        Two bedroom unit - $636

                        Three bedroom unit - $735

The City has one existing tax credit project, River Heights Apartments, that was constructed in 1992 with additional subsidy from Rural Development. Rural Development has also provided rent assistance for most of the units in this building so that it can serve very low income households.

Recommendation: Although Aitkin has an extremely high percentage of income-based, subsidized housing, we believe that the relatively large population of low to moderate income renter households in the Aitkin Market Area justifies construction of a moderately sized tax credit project.

Between the subsidized projects and the 21 Aitkin households receiving rent assistance, over 20% of the City’s households live in some form of subsidized housing. This is an extremely high percentage, but highlights the City’s important role as provider of affordable housing for the area.

Our rental survey found a vacancy rate among Aitkin’s subsidized properties of less than 1%. The only vacant unit that was found was in one of the senior designated buildings. The manager of this property reported that units were refurbished when they turn over, and she was confident that this unit would be quickly leased when actively marketed. All of the City’s 44 general occupancy rental units were fully occupied. Although there were reports that one of the projects has had vacancy problems in the past, both of the general occupancy projects reported waiting lists at the time of this Study. Ripple River Townhomes reported especially strong demand for three bedroom units.

As the City and the surrounding area continue to grow, we see continued demand for affordable rental housing. With the absence of other forms of deep subsidy for rental unit production, tax credits, combined with other financial assistance such as TIF, IRRRB assistance and any other available State grants, will provide the best opportunity to add to the City’s affordable rental housing stock.

We would recommend a modest tax credit development with 10 to 12 units to serve moderate income households. We would recommend that most of the units in the project have three bedrooms, with the remaining units serving two bedroom households. Although the gross monthly rent for a three bedroom unit could be as high as $636 under the tax credit rules, we would recommend that every attempt be made to keep the unit rents at or below the Fair Market Rent (FMR) levels set for the Section 8 Existing Program. The current FMR for a two bedroom unit is $471, and the FMR for a three bedroom unit is $591. If these units are accessible to households with Section 8 assistance, it will expand the target market for the units to lower income households. According to the HRA, it is difficult for larger families to find three bedroom units in Aitkin using their rent assistance.

Although we do not recommend any particular developer for tax credit projects, the City of Aitkin may be able to encourage some local housing providers to pursue the development of tax credit units. The Central Minnesota Housing Partnership has developed tax credit projects in other communities, often with the involvement of the local Housing and Redevelopment Authority (HRA). D.W. Jones, which manages River Heights Apartments in Aitkin, also has done some very successful tax credit projects, including the Grand Rapids example cited previously. D.W. Jones has been able to use IRRRB assistance in some of their projects to achieve very affordable rent levels. The Kellar Foundation has also been successful in utilizing available resources for rental housing development and also could be a potential developer of tax credit units.

Although we believe that the City could use a tax credit rental project, we must acknowledge that Aitkin would be at a competitive disadvantage when competing for tax credits. The Minnesota Housing Finance Agency awards bonus points to proposed projects in areas of the State that they consider “under served”. These bonus points can often determine which projects are selected for funding. Aitkin County is not listed among the areas eligible for bonus points. The State ranks “under served” areas based on population and job growth.

4.         Monitor the availability of and the need for future subsidized rental units/preserve the existing subsidized inventory

Findings: The City of Aitkin has a good supply of subsidized housing units serving both seniors and families. The rental unit inventory completed for this study found 181 units of subsidized housing in the City, including tenants with portable Section 8 Existing Rent Assistance. Of the 160 subsidized project-based units, 116 are for senior occupancy and 44 are general occupancy. In total, approximately 46% of all of the rental housing units in Aitkin are considered subsidized, and over 20% of all Aitkin households live in some form of subsidized rental housing. Most of the subsidized housing options charge rent based on 30% of the tenant’s household income. These are extremely high percentages of subsidized housing and households when compared to other Minnesota communities. In other greater Minnesota regional centers we would typically see less than 10% of all households living in income-based rental property, compared to more than 20% in Aitkin.

Although we are not aware of any pending losses to the subsidized rental inventory in Aitkin, there have been losses or potential losses in other communities in Northeastern Minnesota, including projects in Itasca County and St. Louis County. Owners of subsidized projects wishing to terminate their subsidy contracts must file an Impact Statement with the Minnesota Housing Finance Agency indicating that they are considering pre-payment of their mortgage. The Impact Statement is required one year prior to any subsidy opt-out.

Our projections indicate continued population and household growth in and around Aitkin over the next five years. Growth is anticipated among households in most age groups, including younger households and senior households. Younger households and senior citizens tend to rent with greater frequency than middle-age households, and often have lower income levels. This anticipated growth should continue to generate demand for subsidized units from lower income rental households. Some of the rental unit recommendations made above are intended to help address overall unit demand caused by growth.

Recommendation: With the absence of deep subsidy production programs through the federal government, it will be nearly impossible to develop new subsidized housing that can charge rent based on 30% of household income. Therefore, it will be important that the City preserve its existing stock of subsidized rental housing. The City will be unable to replace any lost units with equally affordable housing. In other communities where subsidized units have been at risk, the HRA or a local non-profit group has often needed to become involved to purchase the building and preserve the affordable units.

As demand for subsidized units increases, it may be possible to increase the number of Aitkin households that receive Section 8 Existing assistance. Section 8 enables low income households to live in private sector rental units while utilizing a federal rent subsidy. Section 8 Existing assistance is often preferred by tenant households, since the tenant based assistance allows the household to move to the unit of their choice. There are only 34 households in Aitkin and Mille Lacs Counties receiving Section 8 Existing assistance. Currently, 21 of these households live in Aitkin.

While we do not believe that is will be possible to build new subsidized units, the moderate rent tax credit project, the senior housing with services units, and a possible 2nd phase at River Place Townhomes should all add to the inventory of affordable or age-appropriate units, which will help to address some of the demand for lower rent housing.

5.         Consider the adoption of a Rental Registration and Inspection Program

Findings: An increasing number of communities are finding it necessary to monitor and inspect rental housing for health and safety problems. This is especially true in communities with large stock of older housing units. Aitkin has an above-average percentage of rental housing when compared with other Minnesota jurisdictions. The 2000 Census identified over 43% of the City’s occupied housing as renter occupied. While a majority of the City’s rental housing has been built since 1970, the 1990 Census identified approximately 28% of the rental units as pre-1940 construction. This represented 93 rental units. While many older units have been well maintained, the fact that a large number of the City’s rental units are more than 60 years old indicates that an inspection program may be warranted.

Although we do not know for certain, we suspect that many of the 26 rental units listed as vacant by the 2000 Census may be in very poor condition. We found an extremely low vacancy rate in the City’s better quality rental housing. Our research indicates that strong rental housing demand exists, and we do not believe units would be vacant and available for rent unless the condition was so poor that tenants did not wish to occupy the units.

Communities that have instituted Rental Registration and Inspection programs have done so to monitor the supply, condition and safety of rental units. Ideally, landlords are made aware of programs that can help them rehabilitate their rental housing to comply with the inspection program standards.

Recommendation: We recommend the establishment of a Rental Housing Registration and Inspection Program to assure that all rental units in Aitkin comply with housing laws and codes. The Rental Housing Inspection Program should include annual or bi-annual registration and inspections. The Rental Housing Inspection Program will assure that Aitkin rental units are safe and sanitary, thus removing blighted and unsafe conditions.

Funds to operate the program can be generated through rental registration fees or through administrative funds provided through housing rehabilitation programs.

It must be stated that Rental Inspection Programs generally meet with controversy and resistance from rental property owners.

6.         Promote rental housing rehabilitation programs

Findings: As documented in the previous recommendation, we believe that Aitkin has rental properties that need repair. Promotion of a rental housing rehabilitation program would be an important component of a Rental Registration and Inspection Program. Through the process of an annual or bi-annual inspection, rental property owners could be made aware of rental rehabilitation funds to correct deficiencies in their rental properties.

Rental rehabilitation programs available through the State of Minnesota already are available in Aitkin through Lakes & Pines Community Action Council and through the Arrowhead Economic Opportunity Agency. In the past, these programs have been under utilized in Northeastern Minnesota. Rehab staff have identified several reasons why the programs have been difficult to administer. Much of the difficulty relates to the high standards that must be applied when federal funds are used for rental rehabilitation. The property owner may request funds to correct a single building deficiency, only to find out that the entire building must meet the applicable rehab standard. In some cases, the use of rental rehab funds may also trigger federal labor standards compliance, increasing the complexity of participation.

Another identified problem that has limited the use of the program is the“red tape” associated with the funds. Owners of small rental properties have often determined that the benefits of the program do not justify the time and paperwork required to participate. However, in conjunction with a rental inspection program, it is probable that small landlords would be more motivated to deal with the paper work requirements.

Despite the identified difficulties with the rental rehabilitation programs, we believe that substandard rental units exist in Aitkin and that this housing need is not being adequately addressed. The rehabilitation of older rental units can be one of the most cost effective ways to produce decent, safe and sanitary affordable housing.

Recommendation: To make a rental rehabilitation program more effective for property owners, the City may need to seek grant funds that allow for program design flexibility that could make a program more workable. The Small Cities Development Program (SCDP) allows can provide funds for a rental rehabilitation program that is structured by the community. The City is planning to apply for SCDP funds in 2002 for neighborhood revitalization. We are uncertain as to the inclusion of a rental rehab component in this proposed grant application.

The assistance formula would need to be structured to make rental rehabilitation assistance more financially attractive to property owners. The Department of Trade and Economic Development (DTED), which administers SCDP funds for small cities in non-entitlement counties in Minnesota, has encouraged small communities to tailor assistance to the needs of the property owners. As a result, they will often fund rental rehabilitation programs that involve an owner’s contribution of only 25% of the rehabilitation project cost. The 75% SCDP contribution can be structured in a variety of ways, but will often be in the form of a combination deferred loan and low interest installment loan. DTED’s experience with small rental properties in lower rent communities has been that it is not economically feasible for most rental property owners to participate in rental rehabilitation programs unless a heavy assistance package is offered.

7.         Work with rental property owners on tax issues/other programs

Findings: Minnesota’s property tax structure for rental housing has been a barrier to both new rental construction and the provision of affordable units. Legislative changes in the past few years related to rental property tax reductions may represent an opportunity for the City to work cooperatively with rental property owners to assist them in lowering their property tax burden.

This initiative can be coordinated with other rental housing recommendations in this section including rental rehabilitation and a rental inspection program. To qualify for lower tax rates, there will need to be some certification to the State of direct benefit to low and moderate income tenants. If the City initiates a Rental Registration Program, it would provide an opportunity to both advise rental property owners of the requirements and to assist in the certification process. In the process of providing this technical assistance, the City would also be in a good position to promote its rental rehabilitation programs and to work with owners on compliance issues regarding the rental code program, if enacted in the City.

The Aitkin County HRA currently performs local inspection and monitoring for the 4d properties in the County.

Recommendation: We recommend that the City work with rental property owners to promote the property tax reduction option and to assist with the qualification requirements. This will help to provide affordable rental housing options.

The Legislature has taken action to phase-out the 4d property tax classification over the next few years, so this recommendation may have limited relevance. However, affordable housing advocacy groups have been pushing to retain a property tax break for affordable housing projects, so 4d or a similar program may be available in the future.

From the City’s perspective, property tax reduction programs may reduce the amount of tax collected from rental parcels. However, the increased cash flow for property owners may help to improve the physical condition of some buildings and help landlords cope with costs they may incur due to rehabilitation.

8.         Continue efforts to provide renter education and training

Findings: Like many communities in Greater Minnesota, Aitkin, and the other Cities in Aitkin County, have identified a rental housing shortage as a high priority community need. This issue is very complex, involving supply, price, tenant income and other factors. One factor that is often overlooked in the discussion is tenant rental histories. In some cases, a rental housing crisis is not only a shortage of affordable units, but a human issue, as some tenants are “hard to house”.

Increasingly, landlords of large and small rental properties are performing active tenant screening before lease-up. Credit checks, reference requirements, criminal background checks and rental histories are being reviewed as part of the tenant selection process. We have been in a number of communities around Minnesota that report a housing shortage, only to find that vacant rental units may exist, but tenant screening practices have prevented some tenants from renting the available units.

One property manager in Aitkin reported that up to 50 tenant applications have been taken this year by a subsidized rental project that have been rejected through the tenant screening process. This problem is not unique to Aitkin County, but as the City and the County continue to grow in the near future, additional demand for affordable rental units will put pressure on unit availability, and ultimately of rents. Hard to house tenants will be forced into marginal, and possibly substandard rental housing, as they find it increasingly difficult to rent better quality units.

Recommendation: The Aitkin County HRA, along with the University of Minnesota Extension Service and the Arrowhead Economic Opportunity Agency have developed a renter education course and have offered this class one time in Aitkin. Although attendance was low, they are planning to re-offer the training periodically.

We believe that this is an important service to offer to area renters, and we would encourage continued support and cooperation by the City and local service providers to promote this training to rental households. Home Stretch training for potential home buyers is also being offered in the area, and this opportunity could also be promoted to area renters to help them take the necessary steps to move towards home ownership.

Single Family Housing and Home Ownership Initiatives:

Findings: Affordable home ownership is one of the most frequently cited housing issues in Minnesota. The median owner-occupied home value in Aitkin is estimated to be between $55,000 and $65,000, based on estimated market value data and recent sales activity. While the existing stock is very affordable, it is generally older housing, and may need significant repairs to meet the current expectations of potential home buyers.

Based on the estimated median household income for 2000, a median income household in the Aitkin Market Area could afford to purchase a house at approximately $60,000. A median income family could generally afford to purchase a house at approximately $97,000. While this home “purchasing power” matches up fairly well with the price of the existing stock in Aitkin, it is still lower than the amount generally required to purchase a newly constructed home.

It is important to note that half of the Area’s households and families can afford to purchase a house above this amount. Our income estimates also showed that approximately 21% of all households in the Aitkin Market Area had annual incomes above $50,000. Households in this income range can typically afford the costs associated with new housing construction and account for most of the trade-up activity and new construction that has been occurring in and around Aitkin.

Our demographic projections show that the age ranges between 55 years old and 69 years old will represent the largest household increases in the Aitkin Market Area through the year 2006. Households in these age ranges tend to be predominantly home owners. Empty-nesters and newly retired households have been responsible for much of the higher priced and trade-up housing that has occurred around Aitkin in recent years. Households at the lower end of these age ranges are in their peak earning years, and will often be selling a house and capturing some equity when they trade-up. This gives them adequate financial resources to buy or build a higher priced home.

To assist in promoting the goal of home ownership, the following initiatives are recommended:

9.         Consider a publicly owned residential subdivision development

Findings: The City of Aitkin has few available residential lots for new home construction. Some lots may remain in Ripple View or Black Rock subdivisions, which have been the main locations for new housing construction in recent years. One of these subdivisions dates back to the 1980s, and it went tax-forfeit due to slow sales activity. A few other in-fill lots also remain in the City. However, in some cases, in-fill lots are in neighborhoods with older, lower valued homes, and their potential for new home construction may be limited.

In 2001, a property owner in Aitkin began planning for a small, 11 lot subdivision on the south end of this City. Due to the costs of providing public infrastructure to this subdivision, he has elected to discontinue plans for residential use and will seek a zoning change to allow commercial use of the property.

A number of other Cities in Northeastern Minnesota have faced a similar situation, with private developers unwilling or unable to make a residential subdivision work. In response to limited residential lot availability, Cities, Housing and Redevelopment Authorities (HRA) and Economic Development Authorities (EDA) have become involved in the development of new subdivisions in the last few years. Cities including Eveleth, Virginia, Chisholm, Hoyt Lakes, Mountain Iron, Buhl and Coleraine have all developed subdivisions and sold residential lots. We believe that all of these subdivisions have used funding from IRRRB to provide the infrastructure, which has allowed the lots to be sold at prices substantially below-market.

Recommendation: Although it is a non-traditional role for Cities, we would recommend that the City of Aitkin explore the possibility of developing residential land to help generate new single family housing construction. Most of the Mesabi Range Cities that have developed lots have generated an above average level of new home construction in the following years.

According to building permit records, the City has averaged between 2 and 3 new single family housing starts per year over the last decade. Some communities use a standard that a 2 ½ year supply of improved lots should be available based on annual lot usage. Using this standard, the City should have approximately 5 to 8 residential lots available to meet the expected near-term demand.

There are builders in Aitkin that are willing to construct single family houses for speculative sale. If the City can pre-sell some lots to builders, it would be practical to develop additional lots in the first phase.

Some of the Cities identified above, including Biwabik and Hoyt Lakes, have worked with AEOA to secure construction financing and “affordability gap” financing assistance for home buyers through Minnesota Housing Finance Agency’s Community Rehab Fund. These subsidies can be used to generate home ownership opportunities for households up to 115% of State-wide median income. Small Cities Development Program (SCDP) funds can also be used to provide gap financing for low and moderate income home buyers. If Aitkin were to develop a subdivision, we would encourage the use of these programs to accelerate the absorption of lots and attract new residents to the community.

As outlined previously, Aitkin’s market strength will generally exist in selling moderate to lower valued homes. Higher valued housing has been oriented towards the lakes and wilderness settings in the surrounding townships. A subdivision with modestly priced lots would allow the City to attract home buyers that wish to live in the City at an affordable price.

10.       Utilize and promote all programs that assist with home ownership

Findings: Home ownership is generally the preferred housing option for most households and most communities. Home ownership provides for community stability, improves housing quality and strengthens the tax base. Aitkin has an above average percentage of renter households. While many of these renters are senior citizens, who no longer wish to own a home, the City also has a number of younger households who rent their housing unit. Our projections show growth in all age groups through the year 2006, with a large gain expected in the number of households 24 to 35 years old. People in this age range tend to rent with greater frequency in the younger end of the range, and move toward home ownership as they age.

First time home buyer assistance and home ownership training programs can help the community address affordable housing issues. The City has a large supply of houses that are price eligible for these assistance programs. The home value estimates used in this study indicate that between 65% and 69% of the existing housing stock currently is valued under the $77,540 purchase price limits for the first time home buyer assistance programs.

Home ownership counseling and training programs can also play a significant role in helping marginal buyers achieve home ownership. The Central Minnesota Housing Partnership (CMHP) has been offering the Home Stretch home buyer training programs in Aitkin County. As the City continues to grow, we would encourage continued offerings of this training program in cooperation with promotional efforts by the City’s larger employers.

Recommendations: While these individual home ownership assistance programs may not generate a large volume of new ownership activity, the combination of below market mortgage money, home ownership and credit counseling, and entry cost assistance may be the mix of incentives that moves a potential home buyer into home ownership. One of the City’s housing strengths is the large number of affordably priced existing houses in the community. This makes the community a desirable location for first time home buyers.

11.       Consider a local down payment assistance program or a community-based home ownership promotion program

Findings: One of the largest identifiable barriers preventing low and moderate income households from owning a home is the inability to save money for down payment and closing costs. Some communities have addressed this issue by creating a local fund to match home owner down payments to encourage home ownership.

The City of Northfield has initiated a Down Payment Assistance Program utilizing Community Development Block Grant funds. The Program guidelines are as follows:

            ►          Assistance of $5000 or 50% of the down payment, whichever is less

            ►          Purchaser must be first time home buyer

            ►          Purchase price cannot exceed a specified limit

            ►          Purchaser must be at or below 80% of county median income

            ►          Loan is repaid without interest whenever the house is sold

The City of Fergus Falls and the Area Chamber of Commerce developed the Community Housing Incentive Program in 1996. The Program offers multiple incentives to home buyers who build or purchase a home within the City limits. Some of the incentives are limited to certain income or purchase price restrictions, but other incentives are available to anyone building or buying a new home in the City. Incentives include:

            ►          Down Payment Assistance in the amount of $2,500 is available to eligible buyers to reduce the amount of cash needed to purchase a home. The Down Payment Assistance Program is funded through the City budget.

            ►          Fergus Bucks in the amount of $1,000 are provided to new home buyers. The Fergus Bucks are good for purchases at participating Fergus Falls Chamber of Commerce member businesses. Fergus Bucks are funded jointly by the City and the Chamber of Commerce.

            ►          City Utility Credit in the amount of $500 is provided for the first year of occupancy in a new house. The credit applies to refuse and recycling collection, water and wastewater services. This credit is funded through the City budget.

            ►          Slow Second Mortgage financing is available in one of the City’s subdivisions as an alternative to the down payment assistance. The Slow Second Mortgage provides 10 percent of the mortgage amount in a second mortgage loan. Payment of principal on the loan can be deferred for as long as 10 years, and the interest during the deferred period is paid by the City. This mortgage is provided through tax increment financing assistance to the subdivision. TIF income requirements under State law apply to program participants.

Recommendations: Aitkin should explore the possibility of creating a down payment assistance program or innovative home ownership promotion program using CDBG funds or other available resources. As money is repaid into the fund when houses are sold, the fund can become a revolving source of funds to promote home ownership. Major local employers, IRRRB and the Greater Minnesota Housing Fund may also be sources to contribute to the fund.

The Kellar Foundation has also shown a strong interest in providing affordable housing options in the City, and may be a source of seed money for a local program.

This type of program could be administered for the City by CMHP, which has experience with down payment and closing cost assistance programs.

12.       Consider the development of a Lease-to-Purchase Program

Findings: Most of the existing housing stock in Aitkin is affordable. Our estimates indicate that between 65% and 69% of the single family houses are valued under $77,540, the purchase price limit for first-time home buyer assistance. These homes are affordable for most families, and are well below new construction prices. However, some lower income families seeking home ownership do not qualify for available mortgage programs due to credit problems or lack of savings for down payment/closing costs.

There are some lower valued homes in Aitkin that are being purchased for rental housing. These houses, if improved, could provide affordable ownership options for lower income people. A lease-to-purchase program is a mechanism to create home ownership for families and to keep the lower valued homes in the home ownership market.

Recommendation: We recommend that the City consider the creation of a lease-to-purchase program for existing houses. A lease-to-purchase program enables a family that currently cannot purchase a home due to poor credit, lack of a down payment, etc., to lease a home initially with the intent of purchasing the home at a later date. While leasing the home, the household can work to remedy the problems that have prevented them from buying a house.

When working with existing homes, a rehabilitation component can also be added to the program. It is likely that a lease-to-purchase program will require public ownership of the housing unit. Since there is some risk that the sale will never occur, most private property owners are reluctant to sell properties in this way.

A lease-to-purchase mortgage option is available through FANNIE MAE that could be used to lock in current mortgage interest rates although the actual closing of the sale may not occur for a year or more.

13.       Promote townhouse and twin home development

Findings: As people age, they tend to look for lower-maintenance housing options. In many communities in Greater Minnesota, attached housing options such as twin homes and town houses have been gaining an increasing share of the local new construction market. Attached housing development provides options for empty nesters and seniors to move out of their single family homes, which makes these homes available for families. It is becoming increasingly important for communities to offer a range of life-cycle housing options for residents as they age. When life-cycle options are not available, senior households may choose to move out of the area in search of housing that meets their needs for independent living.

Demographic projections indicate that some of the target populations for attached housing options are expected to decrease slightly in the area over the next five years. The number of empty-nester and senior households in the 55 to 69 year old age group is projected to increase between now and 2006. Households in these age ranges form the prime target market for attached housing. There are no attached housing options in the City of Aitkin, and we believe that pent-up demand exists.

One local developer has explored the prospect of building attached, town house units for individual ownership. He was unsuccessful in pre-selling any units, and elected not to proceed with the development. Introducing a new type of housing can prove difficult. Consumers are often unwilling to buy from blue print drawings. Despite the difficulties, we believe that demand would surface for this type of housing, given the demographic profile of the community which has a median age well above the State-wide median.

Recommendation: We recommend support of the private sector's development of town houses and other attached housing options. The public sector's role should be limited as the private sector is capable of meeting this housing need. Providing appropriately zoned land and planning approvals may be the only incentive that is needed.

In the past, IRRRB has been willing to assist with attached housing construction developments to make the units more affordable. Although IRRRB has indicated that it will be less involved in housing in the future, a potential developer may want to explore this option as part of the planning for a project.

The development of attached housing can address a number of housing goals, including the provision of home ownership options and the availability of life-cycle housing. New units can also help promote the roll-over of existing houses as owners of single family houses in the City opt to purchase low maintenance housing options.

It may be appropriate for the City to become more actively involved in attached housing development as part of any redevelopment efforts. Some communities, such as Alexandria, have developed small, attached housing projects on in-fill redevelopment parcels after substandard buildings were cleared from the site.

14.       Promote a purchase/rehabilitation program

Findings: As has been addressed in the lease-to-purchase and rehabilitation recommendations, Aitkin has a large number of older, single family homes. A significant number of these, both homesteaded and non-homesteaded, are lower valued. These lower valued homes offer an affordable housing opportunity for low and moderate income households, but most of these houses probably need rehabilitation or remodeling to become more desirable to potential home buyers.

Purchase/Rehabilitation mortgages are available through local lending institutions. Some of these programs are of limited use, however, because the acquisition and rehabilitation costs will often exceed the home’s after rehabilitation value.

Attitudinal surveys that we have conducted in other cities have found that purchase/rehabilitation programs are appealing to people who are currently renting their housing. In some similar sized communities, over 80% of survey respondents who were renters indicated an interest in buying a home in need of repair if rehabilitation assistance was also available.

Recommendation: We recommend the development of a purchase/rehabilitation program for Aitkin. A purchase/rehabilitation program will achieve several goals. The program will encourage home ownership, prevent substandard homes from becoming rental properties and rehabilitate homes that are currently substandard. Local housing agencies could offer some rehabilitation assistance in conjunction with its first-time home buyer programs to make the City’s older housing a more attractive option for potential home buyers.

To be successful, the program may need some gap financing assistance to remove the difference between the purchase/rehab costs and the structure’s after-rehab value. Some of the funding sources identified earlier, such as SCDP, the Greater Minnesota Housing Fund, the Minnesota Housing Finance Agency or IRRRB could be a source for gap financing. The City should work with local lenders to develop mechanisms to develop a successful purchase/rehabilitation program.


Redevelopment Initiatives:

Overview: The City of Aitkin has 969 total housing units, according to the 2000 Census. While some housing construction will occur in coming years, most of the housing opportunities will continue to be provided by the housing stock that is already on the ground. This is especially important for affordable housing opportunities, as it will almost always be less expensive to offer an affordable unit through rehabilitation than through new construction. Units that are lost due to deterioration and obsolescence cannot be replaced for a similar price. Evidence suggests that the existing stock is generally being well maintained, especially considering the age of the housing. Emphasis on continued improvement will be important to meet future housing needs.

15.       Promote on-going housing rehabilitation efforts

Findings: Aitkin has a tremendous asset in its existing housing stock. Existing units, both now and into the future, will represent the large majority of the affordable housing opportunities. Existing units generally sell at a discount to their replacement value. Units that are not maintained and improved may slip into disrepair and be lost from the housing stock. Efforts and investment in housing rehabilitation activities will be critical to offering affordable housing opportunities.

The City has tried to secure funds for a concentrated rehabilitation program. In 2001, the City applied for Small Cities Development Program funds for housing rehabilitation. This application was not selected for funding, but will be re-submitted for 2002. Without rehabilitation assistance, there is a chance that the affordable stock could shrink, creating an even more difficult affordability situation at the same time the City grows.

At the time of the 1990 Census, approximately 54% of Aitkin's owner-occupied single family homes were listed as pre-1940 construction. This was more than double the State-wide average for older housing. Due simply to their age, many of these units currently need or will need substantial renovation or rehabilitation.

Recommendation: We recommend continued emphasis on housing rehabilitation activities to address on-going housing rehabilitation needs and to upgrade the existing housing stock. The City of Aitkin, Lakes & Pines CAC and AEOA should continue to seek local, state and federal funds to assist in financing the housing rehabilitation programs.

16.       Look for other redevelopment opportunities in older neighborhoods including acquisition and clearance

Findings: The City may contain houses that are too deteriorated to rehabilitate. To improve the quality of the City’s neighborhoods, and to maintain the appearance of the community, a program should be developed to acquire and demolish dilapidated structures as needed.

With limited available land for new residential construction, acquisition and clearance may also provide the City with some buildable sites for housing redevelopment.

Recommendations: The City should look for resources to acquire and demolish severely dilapidated structures, with affordable home redevelopment on the available lots. IRRRB has been willing to help communities with clearance activities.

As recommended previously, some communities have been able to offer affordable home ownership through modular homes on lower priced lots. In-fill building sites created through acquisition and clearance activities may provide appropriate sites for modular homes or other lower priced options.

Habitat for Humanity has been active in creating housing in Aitkin. Acquired properties could be donated to Habitat for the development lower priced homes.

If slightly larger tracts of land can be assembled, it may be possible to construct small attached housing projects, such as twin homes or 4 unit townhouse projects. We see this type of unit as having some appeal to the area’s large senior population. To be successful, we would recommend a product that is low in cost. A slab-on-grade construction with two bedrooms and attached garage would appeal to a price-sensitive segment of the market. In the City of Alexandria, a number of small attached housing projects have been constructed on infill sites in older neighborhoods and have been very successful.

17.       Utilize the MURL Program

Findings: Aitkin has a large stock of older, lower valued homes, with many in need of repair. Our analysis of estimated market values for property taxes, and recent sales activity, indicates that the median priced home in the City is valued between $55,000 and $65,000. As homes below the median price come up for sale, they may not be attractive options for potential home buyers because of the amount of repair work that is required.

The Minnesota Urban and Rural Homesteading (MURL) Program is funded by the Legislature through the Minnesota Housing Finance Agency. Under the program, the City or a housing agency purchases an existing home that needs rehabilitation, rehabilitates the home, sells the home to a low income family and provides a mortgage with no down payment, no interest and a monthly payment that is affordable for the family. The MURL Program accomplishes many community goals, including the promotion of home ownership for lower income people, and the repair of substandard housing units.

In many cases, the cost of acquisition and rehab will exceed the house’s after rehab value. Although a public subsidy may be involved, the costs to rehab and sell an existing housing unit are generally lower than the subsidy required to provide an equally affordable unit through new construction.

Recommendations: As part of neighborhood rehabilitation efforts, we recommend that the City promote and utilize the availability of MURL Program funds through MHFA to purchase, repair and re-sell lower valued houses to low and moderate income people. In addition to MURL funds, other possible funding sources include SCDP and other MHFA programs.


Other Housing Initiatives:

18.      Support the development of special needs and transitional housing units as needed

Findings: As the largest City in the County, Aitkin is the center for most supportive services. The City also is the logical home for housing to serve many of the special needs populations, including homeless people, families requiring transitional housing, disabled people and other populations with unique housing needs.

The Aitkin County HRA has developed a transitional housing unit for victims of domestic violence. The HRA also gives a preference in the Section 8 Existing Program to applicants who are homeless or are victims of domestic abuse. The Arrowhead Economic Opportunity Agency has been active in St. Louis County in developing housing for homeless people, providing single room occupancy housing, and other special needs populations.

Recommendation: It is difficult to quantify direct needs of special populations through traditional demographic sources. The best available data is from service agencies and advocacy groups that serve these populations. Additional housing for special needs populations should be addressed as the need dictates.

The HRA and AEOA both have experience accessing funds for these types of units. MHFA’s Publicly Owned Transitional Housing Program, and special needs housing grants through HUD may be available to assist with development.

19.       Continue to coordinate relationships with area housing agencies

Findings: The community will need staff resources to plan and implement many of the housing ideas advanced in this study. The City has an active County Housing and Redevelopment Authority (HRA), Lakes and Pines CAC, the Central Minnesota Housing Partnership (CMHP) and the Arrowhead Economic Opportunity Agency (AEOA), all providing housing programs and technical assistance. These agencies all have proven track-records with housing program development and delivery.

Recommendation: While the City is fortunate to have multiple agencies for housing activities, this arrangement could result in no single agency having responsibility to coordinate and implement the housing initiatives recommended in this Study. While there has traditionally been a good degree of staff interaction between these agencies, it will be important that a coordinated approach be used to prioritize and assign responsibility for certain housing programs.