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III-H RENTAL HOUSING 1A THE METROPOLITAN AREA <br />Rental housing plays an important role in the Twin Cities <br />housing market. Approximately 35 per cent of the housing units - <br />in the Twin Cities region are rental units. Traditionally, <br />rental units have provided an affcrdable housing option for, <br />singles, young adults, young .,parried, students, the elderly, <br />and low and moderate income -»useholds. In reality, rental <br />housing units serve a market muc.�: more diverse than that served <br />by owner occupied units. Yet over the past several years a <br />number of problems have developed in the rental market, <br />including: <br />1. Production, of new rental units has declined drastically as <br />households are unable to afford the rents which must be <br />charged to cover costs and financing. <br />2. Many households which in the past would have moved from <br />rental to ownership status are unable to do so due to both <br />the increased cost of housing units and high interest <br />rates. <br />3. The combination of few additions to the supply of rental <br />units, increased competition for rental units, conversion <br />of rental unit:; to condominiums, increased operating, <br />costs, and general inflation has created a situation where <br />many rental units are not an affordable option for low and <br />moderate income households. <br />4. The supply of existing rental units, which iS <br />predominately efficiency and one bedroom units, does not <br />adequately address the needs of families seeking rental <br />units. <br />Precisely becau-se rental housing serves so many diverse types <br />of households and because the relative size of each category is <br />changing the solutio„ to t?�vs'elomblems must be multifaceted. <br />ALL LEVELS OF GOVERNMENT BECOME INVOLVED TO SUCCESSFULLY <br />ADDRESS THE PROBLEMS IN THE RENTAL MARKET. IN PARTICULAR, THE <br />STATE AND FEDERAL GOVERNMENTS HAVE CRUCIAL ROLES IN IMPROVING <br />THE OVERALL INVESTMENT CLIMATE SO THAT THE PRIVATE SECTOR CAN <br />PRODUCE: BOTH RENTAL.. AND OWNER OCCUPIED UNITS AND IN PROVIDING <br />SUBSIDY FUNDS SO THAT LOW AND MODERATE HOUSEHOLDS CAN AFFORD <br />DECENT RENTAL, UNIT:. POSSIBLE ACTIONS INCLUDE: <br />- MODIFYING FEDERAL AND STATE TAX POLICIES TO IMPROVE THE <br />OVERALL INVE:3TME:N.T CLIMATE: FOR THE PRODUC 7 :ON AND <br />MAINTENANCE OF RENTAL. HOUSING. <br />