Sitting at Munkabeans in downtown Shakopee, former Shakopee Mayor Brad Tabke sips coffee out of a white mug with the definition of "complex" superimposed in black script.
During his two terms as mayor, he says he brought in $120 million in commercial, industrial and housing development and recruited numerous companies, including credit card security company Entrust Datacard, technology firm TE Connectivity, Shutterfly, manufacturer TryStar and SanMar warehouse distribution — often with public assistance. But companies such as Shutterfly and Amazon have had to literally bus people to Shakopee to work some of those jobs, because there's not enough affordable housing in Shakopee.
He talks about the difference between subsidized, low-income and affordable housing.
"There's this political context around things that all affordable housing is for vouchers and for Section 8 housing and things like that," Tabke said. "And it can be and that's part of the solution, but that's not all it has to be."
Part of Tabke's current work as an economic development consultant is removing the stigma around affordable housing in local government with the goal of diversifying new developments and offering housing options citizens can afford.
“It’s a really big thing that is important today, but it is critical in the next five years,” Tabke said.
The Metropolitan Council defines affordable housing as costing 30 percent or less of a household’s income. In 2015, the Met Council found a mere one in 10 homes developed in the Twin Cities region were affordable. That year, Shakopee developed just 26 homes that would be considered affordable, and 74 that exceeded it.
In 2014, approximately 18 percent of Shakopee residents worked in the city, according to data from the U.S. Census Bureau.
"If only 20 percent are living in the city... we want them not to drive here and just leave," Shakopee Director of Planning and Development Michael Kerski said of Shakopee workers, calling this a "major issue in Shakopee."
The city hasn't built a new market-rate apartment since 2005, "so if you want to rent a new apartment in Shakopee, you can't," Kerski said.
"When you haven't had a new apartment in 12 years, that tells you that there's pent-up demand," he said.
The proposed Canterbury Commons project would bring 700 apartments and 156 townhomes but rent would range from $1,300 for a one-bedroom to $2,200 for a four-bedroom. Two other projects will bring about 430 housing units to town at Southbridge Crossing and near a new Hy-Vee, but those are market rate units, not "affordable."
"To do something affordable you have to have a huge subsidy from someone because construction costs are so expensive right now," Kerski said.
Big businesses, low wages?
Jessica Boe is a single mother who loves having a five-minute commute to work at MyPillow in Shakope, but she can’t afford to live in Shakopee anymore and is looking for housing elsewhere.
“I don’t feel like I get paid enough doing what I do,” Boe said. “I think there is a lack of affordable housing in Shakopee and not paying employees enough.”
Boe has searched for Shakopee housing for months, looking for everything from townhouses to apartments. The cheapest she could find was a two-bedroom apartment for around $1,000 per month.
She plans to move to a more rural town like Jordan or New Prague if she can’t find anything.
With so many big companies employing people in Shakopee — often with the assistance of Shakopee taxpayers — some people have questioned whether companies are to blame for not paying employees enough to find housing or not helping them with housing issues.
“One of the solutions that I would like to see is when we bring in lower wage employers we should allow those kinds of businesses to build apartment buildings on their site and house their employees,” Shakopee councilman Matt Lehman said.
Valleyfair employs this on-site strategy.
“The reason it’s not being practiced is the business comes in and asks all the rest of the taxpayers (for assistance),” Lehman said.
For example, Shakopee approved nearly $6 million in tax increment financing, which diverts new property taxes from the project into infrastructure near the Amazon fulfillment center, which opened in 2015.
Lehman created a poll on the Concerned Citizens of Shakopee Facebook site this summer that asked “What should be the city’s role in affordable housing?” The councilman offered five solutions to choose from and as of Wednesday, most respondents favored “lower taxation to all houses.” Other options included “allow trailer parks, tiny houses, etc.," “reduce regulations and rules," “directly subsidize development” and “taxpayer subsidies to individuals."
Several individuals commented “none of the above," saying city government should not have a role in affordable housing.
Lehman says subsidizing affordable housing at the expense of the taxpayer is unfair and ultimately decreases the affordability of the home.
“I don’t believe taxpayers should be paying for failure,” Lehman said.
A 2015 city tax report says Rahr Corporation, SanMar, Shutterfly, Inc., Rosemount Emerson and Entrust Datacard — five companies that received tax incentives to open in Shakopee — created 1,913 new jobs in 2015 and 2016, with 16 percent paying less than $15 per hour and 43 percent paying $31 an hour and over.
According to a presentation given by former city economic development coordinator Samantha DiMaggio at a city council meeting, Shutterfly receives around $100,000 in tax abatements annually, SanMar less than $300,000 annually and Rosemount Emerson $150,000.
Tabke says it's worth it.
"Amazon pays over a million dollars in property taxes a year," Tabke said. "It's a huge financial boom to our bottom line. It's just difficult culturally as to how many jobs we can fill from Shakopee."
Small, local businesses also suffer when employees can't find a way to stay in the city.
“There’s a big squeeze happening on all of our small businesses right now because they don’t have enough people to do the jobs,” Tabke said. “Affordable housing is just one slice of the overall solution that we need our political governmental leaders to really work hard on getting fixed.”
Living and working in Shakopee
As Tabke sipped his coffee and discussed the necessity of a variety of housing, Kathy Nielson broke into the conversation.
Nielson is the project coordinator at Live, Learn, Earn and a voice on the Scott County Association for Leadership and Efficiency, or SCALE, which encourages effective and cost-efficient communication and solutions in government.
One of its initiatives called "50 by 2030" aims to have at least 50 percent of jobs in Scott County filled by Scott County residents by the year 2030. A significant portion of its work focuses on bringing employment opportunities to Scott County, sometimes in the form of major corporations.
“A couple of years ago, we realized that all of those good efforts may have some unintended consequences,” Nielson said. “We perhaps did not have enough housing, enough of the right types of housing that employees at place like Amazon and Shutterfly were going to need.”
In 2015, Nielson and other SCALE members formed a subcommittee with a goal of "sustained economic vitality for Scott County" that looks at four sectors of the community as pillars in need of sustenance: transportation, education preparedness, workforce readiness and housing. While the group is still in the research stages, it hopes to educate local businesses and government workers about the need for affordable housing.
Not all residents agree with SCALE's work.
"It should not be a necessity nor should it be a priority to work and live in the same city," Shakopee resident Melanie Smith said.
Smith's husband and two children work outside of Shakopee, as did Smith until a year ago. Smith's trek to her workplace in Mendota Heights took 40 to 60 minutes.
"I do not feel that Shakopee needs more affordable housing or subsidized housing," Smith said. "Shakopee is a suburb and not a huge city like Minneapolis. I feel most people choose to live in the suburbs in order to get away from the big cities."
Smith said there should be more single family homes more suited for suburban cities such as Shakopee.
But other Shakopee residents say it's no longer financially feasible to live in Shakopee. Ash Ellen and her family moved into a Shakopee townhouse in 2013 due to its location: Her husband is an engineer in Burnsville, while Ellen works from home as a project manager.
As her family has grown, Ellen has been looking elsewhere for affordable housing that won’t require expensive renovations.
“Shakopee has great businesses, like Amazon and Shutterfly, bringing families into the area,” Ellen said. "They’re gonna start losing those families to the neighboring cities really quickly."
For companies like Amazon, hiring workers from other cities is necessary to keep up with production. But employees have to get to Shakopee first.
That’s why Amazon pays the expenses for route 495 of Minnesota Valley Transit Authority this year, according to Shakopee City Councilman Jay Whiting. The payment agreement was finalized late July, he said.
The 495 route serves the Mall of America in Bloomington, Burnsville and Shakopee Marschall Road transit stations. Eastbound trips depart from the Marschall Road transit station to Amazon before traveling to the Mall of America. Amazon is covering $70,000 in operating expenses and $304,000 for added bus trips, Whiting said.
Mystic Lake Casino in Prior Lake provides a shuttle bus for its workers, while other local companies such as Shutterfly provide transportation from the Marschall Road transit station to their company, Whiting said.
Another shuttle provides transportation to members of the Confederation of Somali Community in Minnesota from the Cedar-Riverside neighborhood in Minneapolis to Amazon, according to CSC Executive Director Mohamud Noor. The organization works to lower the unemployment rate in the Somali community.
“It is really important to remove barriers for young people and to encourage them to succeed,” Noor said in a Facebook post about the Amazon shuttle in May.
Shakopee is not alone in its struggle to provide affordable housing. The same story is playing out across the county, state and nation.
“It’s not unique to Scott County and it’s not unique to Minnesota,” Nielson said of the lack of affordable housing. “It’s a national crisis.”
“There is not enough affordable housing, existing or being built, and needs are growing,” Met Council spokeswoman Bonnie Kollodge said.
Studies by the Met Council warn that “When people cannot find housing they can afford, their economic security and overall well-being suffer: they are forced to make trade-offs between paying their rent or mortgage and other daily essentials, like food, medical care, and transportation.”
Tabke attributed the lack of affordable development in Shakopee and beyond to three primary causes: First, land prices are too high. Second, development regulations in Minnesota are extensive and expensive. Finally, fees such as those associated with park dedication make the development of affordable housing undesirable for developers.
According to Tabke and others, solutions exist. When developers can find a local partner in the form of government or business, a greater variety of housing is possible.
"We're educating and informing business leaders about why affordable housing is important and why it's critical in the future of everyone's businesses," Tabke said. "So that when an affordable housing project does come forward, they can be leaders."
Regional Editor Deena Winter contributed to this report.