Minnesota state legislators took some time away from their regular duties in the early days of this 70th session to take a broader. Look at critical issues facing the state over the long-term estate planning agency sponsored a similar conference two years ago and it was so well-received that another seminar was scheduled this year Horizons to also included the conclusions and recommendations of the commission on Minnesota's future, which will be presenting tomorrow this new one. We prevent the major portions of three speeches focusing on how changes in the state's population will affect broad areas of public policy first state demographer Hazel Reinhart discusses the nature of population change the Undead Hunter deputy director of the state planning agency and chairman of the governor's Council on employment and training explores The Changing State labor force and finally Jim solum director of the local and urban Affairs office of the planning agency books of housing needs in the next 10 to 15 years.Here is State demographer Hazel Reinhart. Then we will focus on changing age structure in Minnesota and its implications for public policy. I will give a general overview and other speakers will present a more detailed discussion. Since 1970 population in the United States continued to shift to the South or Sunbelt with Florida and Arizona leaving in growth the nation grew at a rate of 4.8% compared with a rate of 3.1% in Minnesota. In other words. Minnesota is growing considerably slower than the nation as a whole. However of all Midwestern states only Nebraska and Wisconsin are growing more rapidly than Minnesota. Between 1970 and 1975 Minnesota increased by 119,000 persons as of 1976. We had not yet reached four million inhabitants. In Minnesota, the metropolitan population that is the population in counties with the city of 50,000 or more and including those counties which account for most commuting to those cities grew by 3% while the metropolitan population grew by 3.4% This trend of non-metropolitan growth is consistent with Trends in the United States. I'm all metropolitan areas and there are five in Minnesota. The same Cloud area is the most rapidly growing. The Twin Cities metropolitan area is one of the slowest growing metropolitan areas in Minnesota in part due to net out-migration the 7 County area of region 11 Hennepin Ramsey, Anoka Washington Dakota Carver and Scott experienced a net out-migration of almost 36,000 persons. The nine-county area which is the Seven Counties plus Chisago and white counties also experienced net out-migration totaling over 26,000 person. As we pointed out earlier the most rapidly growing counties in Minnesota continue to be those surrounding Hennepin and Ramsey and extending in a band in to North Central Minnesota counties experiencing a growth rate of 15% or more which is approximately 5 times the state rate include Dakota Scott Carver Wright Sherburne, Anoka Washington, Chisago Isanti kanabec and cast cast of course is the only County not contiguous to one of the other counties experiencing rapid growth. In the area that is just shaded and not cross-hatched is an area of growth about three times the state rate. As might be expected rates of high net in-migration coincide with the areas of Rapid population growth. Another important aspect of population change is natural increased in 10 counties bursts are so much greater than death that high rates of natural increase our present. These high rates of natural increase contributed substantially to the growth of Anoka Washington Dakota Scott Carver Wright Sherburne Benton Stearns and Homestead counties. It is important to understand that the entire Saint Cloud metropolitan area and the entire Suburban ring of counties in the Twin Cities metropolitan area grew rapidly partly because of natural increase these rates of natural increase can result from a larger proportion of the population being young and in childbearing years or females actually bearing children at a higher rate than elsewhere in the state. The counties with high rates of natural increase are likely to be areas with growing or less rapidly declining school-age populations 5 to 10 years from now. The population the number of counties with populations below their 1970 populations increased from 17 in 1974 to 25 in 1975 among them are Minnesota's three largest counties Hennepin Ramsey St. Louis, as you know, these these contain these counties contain Minnesota's largest cities where all evidence indicates a decline in some instances of substantial magnitude. Other counties with losses are in southern and western areas of the state. Now let us turn to the changing age structure in Minnesota. We are moving from a time when our society is youth-oriented to a time when we will have a greater proportion of our population in the middle years of life in both 1960 and 1970. Approximately 40% of our population was under the age of 20. We are now moving into a. When that proportion of the population is going to be less than 30% this large youth population or the baby. Boom generation has crowded into our elementary and secondary school and is now at the doors of our universities and vocational technical schools. These youth are entering the labor force and their sheer numbers have driven up juvenile offenses. What about the future what changes lie ahead as this generation makes it makes a bulge in the traditional population pyramid and moose full force into the labor force becomes parents themselves needs housing reaches retirement age and finally becomes elderly we will suggest at least some this morning. Other changes are occurring as well. People are living longer with women increasingly outliving men couples are having fewer children more. Minnesota wives are working than ever before these changes will also have dramatic effects on this state on the kind of life. It's people lead and the kind of services that they will want from their government and the private sector The number of children in Minnesota's Elementary and secondary schools will decline by about 22% between 1970 and 1985 yet. These total enrollment statistics. Do not tell the full story The Crying is largely over in the Elementary grades and is yet to be felt in the secondary grades 1st and Minnesota grew in ever larger numbers from the end of World War II a peak in 1959 when approximately 88000 children were born and then begin to decline falling 250-3000 in 1973. This decline in Bruce will result in nearly a quarter million fewer Elementary and secondary students in 1985 1985 incidentally. Should be the year of lower School enrollment. Elementary enrollment should start to increase after 1980 since the birth of 1974 1975 and 1976 are greater than those of 1973. However, the decline at the secondary level will continue until approximately 1990. As Bruce declined in Minnesota, they did not decline at the same rate in all counties. That's why School enrollments will drop by 22% Statewide. several counties might experience declines nearly 50% over half of Minnesota's County's might experience School declines of 35% or more. School enrollments will fluctuate for the rest of this Century because of fluctuating numbers of birth. The current decline has many far-reaching implications such as an excess and Facilities potential teacher layoffs school funding issues and the light. The same decline in burst that affected Elementary and secondary school enrollments will be at work in the post-secondary system at a later date the effect of the decline and Bruce will reach Minnesota junior colleges universities and Vocational Technical Schools about a half decade after the decline is felt in the high schools. A major problem in the next few years will be how to cope with the increasing number of people who may wish to attend a post-secondary Institution. the number of 18 to 21 year olds will Peak around 8 1982 then the entire set of post-secondary educational institutions might experience the same kind of decline. We can see in the elementary and secondary system be produced little pool of undergraduate the 18 to 21 year olds will decline by about 30% or by 100000 between 1980 and 1995. If students continue to attend post-secondary schools at the same rate, they are today the enrollment of those schools would drop by 30% over those 15 years. This two ways has many issues and important one is how to manage the potential growth between now and 1982. And then how to cope with decline after that date. Especially when we realize the pool of 18 to 21 year old is not equally distributed. Over the state and Minnesota public post secondary schools have a strong Regional appeal. Just as that balls of the baby. Boom generation is now reaching the post secondary schools. It is also being felt in the labor force the labor force reflects the number of persons of working-age and the proportion of those persons who are holding a job or actively seeking work. An important Trend in the labor force and one that is expected to continue is a dramatic rise in the number of women working or seeking work in Minnesota in 1974 59% of the couples. Filing income taxes reported that both husband and wife worked. The nature of Minnesota's labor force will further change in the next decade as the baby boom generation moves into the labor force in the next 10 years 205,000 25 to 34 year old will be in the labor force compared with 148,000 during the last 15 years. The need to create job opportunities will shift from a recent emphasis on 16 to 24 year old to the 25 to 34 year olds. The average annual labor force increase in the next 5 years will be the largest in Minnesota's history, but that increase will not be much greater than the increase from 1970 to 1975. The labor force is anticipated to grow in all regions of the state. However growth rates will vary significantly by region more than half of the total 1975 to 1990 increase is likely to occur in the Twin Cities metropolitan area. The income of Minnesota families and the level of living they can't afford could increase substantially over the next decade while girls and family income is influenced by the pace of overall growth. It also varies in relation to certain population factors such as age and sex occupation number of wage earners in the family and the like data from 1970 indicates that male headed families have the highest incomes. Families that feel to workers that is both husband and wife work have a higher incomes that then families were only one of the spouses work and incomes are higher in the middle years of life as opposed to the earlier and later years. This is an important consideration given the anticipated impact of the baby boom generation in the last quarter of this century. Because we will have so many more young families their incomes raise some interesting questions will their incomes be comprable to those of young families today that is smaller than their Elders will a larger proportion of them filled to workers. The level of family income will affect the size of our welfare rolls family income also affects the ability to pay taxes or put another way to support the services that governments now provide. The coming of age of the baby. Boom generation will also have a rather dramatic impact on the number of households or housing units between 1970 and 1990 1/2 million more households could be formed in, Minnesota. The number of households could increase at least at almost a constant rate while population growth slows significantly. This in turn means that the number of persons per household will decline. If housing units are not built to accommodate potential growth and households than one of several Alternatives is likely to develop we might see three or more Generations living together or many more single individuals living with families a situation which was common in the earlier part of this century. And of course in past centuries such a development. Would Mark a dramatic shift from the 1960s and 1970s. In a consumer economy such developments would have significant impacts. The potential growth and households is again a function of the number of people in the baby. Boom generation many of whom are still living with their parents. some important issues that the potential growth of household raises are what are the effects of large household growth upon local governments and the services they provide What will the increase in the number of households mean for future land use? What kind of housing will be needed in the future? This baby. Boom generation will also have an impact on the transportation system. In the. Between 1940 and 1960. We saw almost no change in the number of persons 15 to 74 years of age when we might roughly call a pool of potential drivers. But since 1960 this age group has increased by almost 600,000 between 1975 and 1990. It will increase almost another half-million. The slightly more accident-prone 15 to 24 year olds will think about 1980 and then declining number? The number of automobiles is also likely to increase in 1950 Minnesota had 1.14 automobiles per household that racial was 1.56 in 1975. The number of Autos in Minnesota increased by almost a quarter of a million between 1970 and 1975 projecting no increase in the number of Autos per household potential household growth could increase the number of cars in Minnesota by almost another half-million between 1975 and 1990. How are yous dominated Society has also play some strains on our criminal justice system. The kind of crimes committed in Minnesota are likely to change in the last part of this century. Why? Because we expect a 30% decrease in the number of juveniles. We know that from a rest patterns that certain crimes especially property crime seem to be highly correlated with juveniles. However arrests related to chemical dependency specifically driving Under the Influence are highly related to adults. Violent crimes including murder rape aggravated assault and robbery are least associated with age. Given, these date has several questions come to mind. What will be the impact of a smaller juvenile young adult population? It would appear that the sheer number of juvenile arrests should decrease due to the sharp decrease in the juvenile population. However, total number of arrests are not likely to shrink substantially why because violent crimes are not highly associated with age and chemical dependency related arrests, especially driving under the influence. Have their highest incidence among adults. without going adult population chemical dependency arrest or likely to increase 44% of all the rest of persons 20 years of age and older are drug and alcohol related a great majority of them for driving under the influence. these data pose additional questions What do these changes mean for law enforcement are large pool of potential drivers possibly driving Under the Influence could be trying for traffic Patrol. It also seems apparent that our current commitment to juvenile Corrections will be less pressing in the future. The decrease in juvenile arrest is likely to be offset by more adult arrest placing the burden on a different part of the Criminal Justice System. The last stage of the life cycle the population 65 and over will be our next topic. It is important to point out that the baby boom generation, which we have talked about in this presentation will not reach the ranks of the elderly until 2015. Well beyond the scope of today's presentations. But that point decide the growth of the population 65 and over is an important issue today for the elderly are among the most rapidly growing components of our population. The number of minnesotans 65 and over will grow by 25% between 1970 and 2000 the number 85 and over will grow by 48% because women outlive Men by 8 years the number of women among the elderly is growing even faster. Many Minnesota counties had elderly populations between 12 and 15% of their total in 1970 compared with a Statewide average of 10.7% and a national average of 9.9% The same counties could have elderly populations between 15 and 19% by the year 2004 almost one-fifth. Their populations could be elderly. These counts are higher concentrations are most often in rural less densely populated areas. What kinds of issues does this growing elderly population Race For Us several one centers on housing needs the growing proportion of population over 85 May well mean greater needs for assistance in daily living. It is in this population that we get our greatest share of institutionalized elderly 26% of all women 85 and over live in nursing homes. The cost of alternative modes of care could become very important because personal resources are quickly spent when costly care is required and these costs often become public cost through welfare. Housing programs for the elderly have been popular in Minnesota and may well still be an area of continued need. The delivery of services to the elderly is also likely to be an important issue in the future certain areas of the state will feel the impact of the higher proportions of the elderly more than others almost half of the state's elderly population is likely to be concentrated in the Twin Cities metropolitan area, but as we noted before many counties with high proportions of elderly will be royal and less densely settled and in many cases will be less able to respond to the increase service demands of a growing population over 65. The cities of Minneapolis-Saint Paul and Duluth have a high proportion of elderly from 15 to 17% Finally we can ask ourselves. How will a society adjust to the concerns of the elderly as their numbers grow ours is a society that has been generally youth-oriented and this tendency has been reinforced in recent decades by the large number of adolescents and young adults. That's if sheer numbers can create a change then the shift of the baby. Boom generation two middle-aged should bring a. Of change and our overall social orientation. State demographer Hazel Reinhart addressing Horizon's 2 on population change in Minnesota Horizons to it was a presentation by the state planning agency designed to show state legislators. Some critical issues facing the state in the next decade or two. We conclude the hour today with presentations on jobs and housing. Here is Ed Hunter deputy director of the state planning agency and chairman of the governor's Council on employment and training. I might ask this morning. It's a discuss in more detail. The major changes that are occurring in Minnesota's labor force and their implications. My presentation will focus on four important issues the increase in jobs necessary to accommodate labor force growth the effect of a large number of Youth in the labor force, the implications of a continued increase in the labor force participation of women and finally differing rates of employment growth for various major industry groups. Is Hazel Reinhardt noted earlier? The term labor force is used to represent those individuals in the population who are aged 16 and over for either employed or unemployed and actively seeking employment. Changes in the labor force are the result of first and most importantly changes in the population and second the likelihood that an individual will have a job or will seek employment. During the course of my presentation. I will refer to participation rates the percentage of the population in a particular age group, which is in the labor force. For example of males in the population aged 25 to 34 95% are in the labor force participation rate. Is this 95% This participation rate is one measure of Labor Force attachment. Minnesota's labor force is projected to increase by 190,000 persons by 1980 and 11% growth over 1975. This percent increase is almost identical to the growth from 1970 to 75. From 1975 to 1980. The average annual increase in the labor force is projected at 38000 persons per year compared to 36,000 persons per year from 1970 to 1975. Both of these rates of increase are substantially above the average of 26000 persons per year experienced during the 1960's. These projected increases will require the creation of a substantial number of jobs to accommodate these entrance into the labor force as well as to provide opportunities for those who are already unemployed. It will require creating jobs at a rate equivalent to that experienced in Minnesota during the past decade. There are important issues which result from The increased number of women and youth however Minnesota's future economy should accommodate the expected labor force growth. Labor force growth after 1980 presents an entirely different picture continuing to grow but at a much slower rate. From 1980 to 1985 the labor force will grow by only 7% compared to the 11% during the. 1975 to 80 from 1985 to 1990. The reduced rate of growth will be even more dramatic with expected growth estimated at only 4% The annual average increases will be 27,000 persons per year from 1980 to 1985 and only 18,000 persons per year from 1985 to 1990 compared to our recent experience of 38000 per year. There will be significant differences in labor force growth among the various regions in Minnesota. Is Hazel noted between 1975 and 1990 over one half of the growth in the states labor force 250,000 persons will occur in the metropolitan region. The Metropolitan region and those regions shown in the dark on this side will have projected increase is greater than the state's average. Several regions those in North East and West Central Minnesota are expected to have very small increases in their labor force. If the increase labor force in any region is not matched by adequate employment opportunities migration from the area may result. Similarly areas where substantial new job development takes place will become relatively more attractive particularly the young workers. Certainly, the projected increases in labor force for these regions is a matter that should be looked at carefully. Each of the regional development commissions and the Metropolitan Council will need to examine its own projected Outlook and to plan accordingly. In the next 10 years, Minnesota will experience a significant reversal in the number of Youth entering the labor force. During the last 15 years the number of Youth aged 16 to 24 who have entered the labor force increased sharply as the effect of the baby boom was felt. From 1960 to 1970 an average of 13000 youth enter the labor force each year. Between 1970 and 75 our most recent five year. An average of 20000 youth entered the labor force each year. During the next five years 1975 to 1980 annual increases will be only $8,000 per year. Although the surge of young workers into the labor force will begin to decline the current increase will continue peaking in 1977 or 1978 for the next several years. At least youth unemployment will continue to be a serious problem. Best youth aged 16 to 24 were responsible for much of the states labor force growth during the late 1960s and early 1970s by the yellow bars on the slide. During the late 1970s the growth rate will shift to jobseekers aged 25 to 34. And these are represented by the green bars on the chart. Further change will occur during the 1980s when the baby boom generation moves into the 35 to 44 year-old age group and this group is represented by the red bars on this slide again demonstrating the movement of this baby boom generation through the labor force. After 1980 the number of Youth entering Minnesota's labor force will decline dramatically during the. 1980 to 1985. The number of persons aged 16 to 24 in the labor force will decline by 38,000 compared to these significant increases. I've already noted during each of the preceding five-year periods. During the five-year period beginning in 1985 the number of young persons in the labor force with declined even more dramatically decreasing by 75000 first. This precipitous decline in the number of Youth in the states labor force after 1980 May well represent a serious obstacle to economic growth. These labor force changes will have various effects the markets for many goods and services will change. Hopefully Improvement can be expected in the critically high unemployment rate among youth. Employers will have an increasingly difficult time filling those jobs traditionally filled by Young workers. It is a fact that use in our society take a major step into adulthood by getting and keeping a stable job when use in their late teens or early 19th or early twenties have difficulty finding jobs. This is a serious personal and social problem. Employment does not just provide income. It satisfies other needs as well the need to succeed to establish a cell a sense of self-esteem to feel important to assume and to share responsibility and to make a contribution to the community. Minnesota has an effective program for providing summer jobs for youth. Perhaps some way could be found to allow this program and to contribute even more effectively to the transition from school to work. In addition to the current influx of Youth and the problems it presents. Another major issue requiring your attention is the continued increase in the number of women in the labor force. For women changes in the world of work since the end of World War 2 have been profound the 1960s can be called the decade of the working woman. One Observer has called this change this increase in women in the labor force the greatest social transformation of the night of the 20th century. Women accounted for two-thirds of the growth in the US labor force over the past 20 years. Is Hazel earlier noted? The Minnesota women now comprise approximately 40% of the state's labor force between 1960 and 1975. The number of women in Minnesota is labor for increased by 287000 persons compared to an increase of only 146000 men. Labor force participation rates for women in Minnesota increased sharply from 35% in 1960 to almost 44% in 1970. This increased attachment to the labor force has been due in part to a decline in the birth rate the resulting smaller family greater interest by women in pursuing their own careers. An increased emphasis on equal employment opportunity and changes in the occupational structure providing more employment opportunities for women. Approximately one-half of the rear entrance or new entrance into Minnesota's labor force during the rest of this decade will be women for several age groups particular those in the age group 25 to 34 the share of the total labor force represented by women will increase more significantly. All the women in the labor force have made substantial gains much more remains to be done. Lower wages and continuing restrictions on Entry to certain jobs continue to cause a gap between men and women in the labor market during the recent recession women experienced significantly higher rates of unemployment than did men. Although the number of women entering the labor force has increased there has been a decline in the proportion of women entering professional managerial and Technical occupations. During the evidence of these changes over the past 20 years and the outlook for continued increase in female participation rates. There seems little doubt that A continuing change in the economic status of women will dominate the next two decades. This will have a profound effect on the family on our economy on social values. There will be other implications as well the availability of daycare services for working women with children. I continued emphasis on equal opportunity. Further changes in the role of the family and the responsibilities of parents. And perhaps even different housing and commuting patterns associated with two earner families. The newly-established Minnesota Commission on the economic status of women has addressed many of these concerns and I understand will soon distributive distribute a report summarizing available information and data on women in Minnesota. Trip planning agency has prepared some very preliminary projections of employment to the year 1990 by major industry group. Between now and 1990 employment in Minnesota is projected to increase by an average of 1 1/2 per cent per year. Almost exactly the same growth rate projected for the United States. What's a 1974 Minnesota's growth rate in jobs exceeded that of the nation? Since the recent recession had a greater impact on employment nationally than it did on Minnesota. The recovering National economy is expected to accelerate more quickly during the next three to four years. Minnesota's growth rate. However, is expected to exceed that of the nation during the 1980s. Although total employment in Minnesota follows National Trans very closely. There are some employment sectors where the trends different enough to be worth noting. Agriculture as we all know is an important part of Minnesota is economy relatively twice as many persons are employed in agriculture in Minnesota that are employed in agriculture in the nation. As expected as farming becomes more efficient fewer workers will be required to produce farm products. This has been true in the past and will be true in the future. But the employment decline is projected to be slower slower here than in the rest of the country. The service sector is the fastest growing area of the private economy and has grown faster in Minnesota than in the nation. This trend is expected to continue to 1990. Although as I earlier indicated the recovery of the national economy may cause more rapid growth during the next three to four years in the United States been in, Minnesota. Manufacturing is another sector that has grown more rapidly in Minnesota than in the United States. This has resulted in younger Industries less sensitive. Perhaps the economic downturns and quicker to rebound from recessions. Manufacturing employment is growing more slowly than total employment for both the United States and Minnesota. The future Vitality of manufacturing as a basic activity may depend on the extent to which Minnesota provides a climate for research and development and for the application of new technology. Not all sectors of Minnesota's economy will keep Pace with national growth rates employment growth in Minnesota's construction industry will be less than the United States. This has been true in the past and is expected to continue to be so the 1990. One reason for this slower rate of growth maybe the population growth projected for Minnesota, which is of course lower than that of the United States and which will result in a lesser demand for residential construction. The finance insurance and real estate sector of the state's economy is also expected to grow at a slower rate than that of the nation. Although the Twin Cities metropolitan area is a financial service center for the Upper Midwest. It is expected that our substantial growth rate will be somewhat less than other rapidly growing areas, especially in the South and Southwest. Although Minnesota's employment in this sector is projected to grow more slowly than the nation. It will still grow more rapidly than the state's total employment. In a few minutes allotted to me. I have discussed very briefly. Some of the projected changes in Minnesota's labor force. It's clear that we must provide a level of economic growth necessary to meet the needs of these labor force entrance. It is clear that we must ensure and effective labor market the matching a job Seekers with suitable jobs. It is clear that we must provide necessary retraining programs failure to do these things will result in unemployment under employment worker dissatisfaction and inadequate use of our human resources. These problems have high costs both human and social. These changes in Minnesota's labor force have implications for many state policies and programs vocational training higher education energy policies Environmental Protection Industrial Development unemployment insurance and particularly programs to meet the needs of the unemployed and underemployed. These changes are also also going to affect household formation and housing needs and these are issues that Jim solum director of The Office of local Affairs and will now address. How would we respond if we were told that in the next 10 years a city of 246000 households a city larger than Minneapolis was to be built somewhere in Minnesota. In a real sense, we've just been told that in the demographic data that Hazel presented this data along with the recently completed housing needs analysis shows that in the next 10 years about 431000 total new housing units will be needed in, Minnesota. The units needed just for new households 246,000 would result in a city larger than Minneapolis. If all were located in the same spot assuming Hazel's production of about 2.6 persons per household. The total units needed 431000 represent a population over half that the metropolitan area today. These 431000 housing units will not all be located in one spot but there construction and location do raised a number of policy issues for the state of Minnesota. Where will these units be located what families and individuals will have access to housing what will they cost which families will be able to afford the what services and Facilities will the new housing units need what impact will they have on land use and on the environment and to what extent will they add to existing urban and rural sprawl? Perhaps the most important issue is how the state of Minnesota working with federal agencies local governments in the private sector can ensure that housing is provided to those families and those locations where it is needed most. But the basic point and the one from which all discussion about housing policy must begin is that there will be a quarter of a million new households in the next 10 years and that this combined with the need to replace existing stub standard units means that about 431000 units should be provided an average of 43000 units a year. Every region of the state will add new households in the next 10 years. Every region will also require new units to replace those unfit for further use the increase in new household ranges from 9% in region 6 W, which is Western Minnesota to 36% and region 70 the moral Pine City area and 34% in region 7 W, which is the st. Cloud area. The analysis also shows that every region of the state will require substantial addition to its housing stock in the next 10 years total additions to housing stock in region 6 W again, Western Minnesota, which has the smallest total need. This is 5350 units over the next 10 years in region to the Bemidji area with one of the smallest populations of any region the data shows that about 7860 units will be needed over the next 10 years. The metropolitan area will require about 260,000 units over the next 10 years. It is impossible to separate a discussion of number of units needed from a discussion of the ability of to pay for housing the estimates prepared for the housing distribution plan show that over the next ten years about 194000 families will require some form of direct housing subsidy. Approximately 42% of these will be the elderly 58% nine elderly. This age distribution is important to understand because most of the housing units receiving a direct subsidy today are for elderly family and in almost every community in Minnesota subsidized elderly units are much more popular and acceptable than subsidized family units. Anyone who has looked at thought about buying or try to buy or rent a newer existing housing unit in the last year knows about the increase in the cost of housing housing cost in The Last 5 Years have increased at a rate much greater than that of personal income in the. 1970 to 1975. The median sales price of a house Nationwide Rose $10,900 median family income increased only $4,124. The impact of inflation on the cost of money which is the largest cost element and housing has also been dramatic at 7% the monthly payment on a $40,000 house including principal taxes and interest is $337 at 9% It's $388 a 2% increase in interest rates results in a 15% increase in the monthly payment. 20 years ago the portion for interest of the monthly payment in the first year of a mortgage was 67 cents out of every dollar today. It's 92 cents out of every dollar. This is the result of both having to borrow more money as well as having to borrow at a much higher rate. one last piece of data about the price of homes in Minnesota data from the most recent sales ratio study conducted by the Department of Revenue shows that the percentage of homes selling for over $35,000 has increased by 50% over the previous years. The percentage of homes in the lower price category dropped correspondingly. The selling price of all homes is clearly moving upward and at a very rapid rate. All too often we think of housing costs only in terms of home ownership and we forget that an increasing number of families in Minnesota are renters and an even larger number of families will be renters in the future one bit of information on rents the Department of Housing and Urban Development as a part of the administration of its present housing subsidy Program help you like something called fair market rent, which is the rent developers can charge in new units receiving HUD subsidy for the purposes of understanding current rental cost a one-bedroom apartment in a new walk-up building now has a fair market rent of $259 per month in Minneapolis Saint Paul to 36 in Duluth and $227 in Worthington. A two-bedroom apartment in an elevator building in the metropolitan area has a fair market rent of $351. In Duluth, $347 and in Worthington $365 per month. Rents in new apartment buildings are high. It's clear that substantially more units of housing will be needed in the next 10 years that they'll be needed in all areas of the state that they'll cost more and that many families will have increased problems in finding units they can afford. What thing is being done? State government has already taken a large number of actions to help meet Minnesota's housing gauge indeed few states have done more in the last five or six years to develop and Implement an effective and comprehensive State housing assistance program. For example, Minnesota is the only state that finances a housing Rehabilitation loan and grant program with its own resorts. The most recent data shows that 4600 housing Rehabilitation loans have been made and 900 Grant Ave. Been made in the program administered by the state Housing Finance Agency. In the past year because of the ability of the Housing Finance Agency to provide permanent financing at an acceptable interest rate and an inefficient way, Minnesota has received a disproportionately large share of federal Section 8 subsidized units. The Minnesota Housing Finance Agency is also implementing an affordable homes program to test whether or not a smaller less expensive home with fewer amenities has a market potential in Minnesota. Senator Coleman mention this program earlier. Minnesota is also the only state with a special program for Native American housing funded with State money. And in Minnesota, we are one of the very few states where State agencies the regional planning agencies and the federal agencies are working together to develop and Implement a housing distribution playing. The Minnesota Housing Finance Agency now uses this potato distribution plan in the administration of all of its programs. The success and the use of this plan does show that specific the tail and carefully administered policy tools are important when they exist and are effectively used they can and do have an impact. Another example is the effort of the Metropolitan Council to get subsidized housing in the suburbs in July of 1971. The metropolitan area had almost 19,000 units of subsidized housing 90% were in the two Central cities 10% in the summer. By October of 1976 the metropolitan area supply of subsidized units had grown to 30,000 73% in the central City's 27% in the suburbs. The shift in distribution is a result of specific carefully developed and effectively administered housing policies on the part of the Metropolitan Council. Housing assistance programs are complex in their Administration and to be effective. They require the close cooperation between government at all levels and the private sector much of the effort of state government must be in building and maintaining these Cooperative working relationships. It's important to understand that no state including Minnesota can with its own resources meet the total range of housing needs that exist. The federal programs must be a major element in any state effort. Without a major commitment by the federal government both to provide assistance as well as to cooperate with state and local governments. The housing needs of Minnesota will not be men. There is little good data available today on the number of new units constructed in Minnesota their cost or other basic characteristics work is underway in state government and with the federal agencies and the regional development commissions to improve the availability and reliability of housing data given the large number of State dollars now invested in housing resources. It is important that an adequate planning and evaluation process be continued to ensure the effective use of these dollars in all regions of the state. If 431000 new units of housing were provided in the next 10 years and at each of them used an acre of land, which is a common local standard the addition to urban and rural sprawl would be enormous The increased service cost for local governments would also be enormous. It's clear that he knew unit of housing won't use an acre of land what isn't clear is the requirements and standards that will be used and the results. These standards will have both on the cost of housing as well as the cost of Public Services to households. It is households that create the demand for local government services, and it's important to remind ourselves that well a population of some regions of the state will decrease in the next 10 years as Hazel is indicated. The number of households in every region will increase in that same. Housing policy therefore cannot be separated from Community Development policy in the provision of Utilities Road schools and Community facilities. We must develop and use policies which complement our housing policies of the future cost of local government will be determined by the way in which these housing units are built and distributed across the face of the land much of the cost of these new units will be determined by the standards and conditions placed on their location by local governments using the powers given them by the state of Minnesota. As of now, there is no State policy which deals with the impact of Housing and local government service cost. We know that almost a quarter of a million new household will be formed in Minnesota in the next 10 years. We know that we will need to provide a total of about 430 1,000 units in the next 10 years. We also know these units will cost more the families needing them will be smaller and that there will be a need for new housing units in every region of the state. We have available state and federal programs to help meet our housing needs. We know that it takes close cooperation between governments at all levels to make these programs effective. What is needed now is a conscious effort to bring together all of the elements affecting the delivery of Housing and make them work together to meet the needs that exists throughout Minnesota gym. So I'm director of The Office of local and urban Affairs at the Minnesota state planning agency preceded by Ed Hunter deputy director of the agency. They spoke at the horizons to a Conference held in the January other speakers gave state legislators their impressions of population changes on education transportation land use and energy tomorrow. We presented highlights of the second session of the rising conference that you can Fusion. So the commission on Minnesota's future. This is Bob Potter.