The Capitol grounds covered in snow on Dec. 19, 2024, following the first significant winter storm of the season. Photo by Michele Jokinen/House Public Information Services.
Last year, a brand-new coalition of faith groups, housing developers, social justice advocates and lawmakers from both sides of the aisle united behind a set of wide-ranging policies designed to make housing in Minnesota more affordable by building more of it.
Most of the coalition’s priorities died, but they’re back again this year, with a retooled legislative strategy and message. With a split Legislature and chaos reigning in the House, bills with broad bipartisan support have the best chance of making it to the governor’s desk this session — and housing is one area where Republican and DFL lawmakers are optimistic they can make a deal.
Minnesota, like the U.S., is facing a shortage of homes. As a result, more people are competing for fewer homes at every level of the affordability spectrum, from subsidized low-income housing to downtown studio apartments and suburban single-family homes — and all of that demand is driving up prices.
Although elevated interest rates are also to blame, the lack of inventory and surging demand have combined to double the median metro mortgage payment in the past five years, Axios reported this week.
In response, the housing coalition is the state-level manifestation of a national movement called “Yes In My Backyard,” or YIMBY, an opposing force to NIMBY (“Not in My Backyard”). Whereas NIMBYs are known for opposing new developments in their neighborhoods, YIMBYs are supporters of building more housing in more places. Local governments, YIMBYs argue, drive up the cost and time of development with restrictive zoning and land use rules, lengthy permitting processes and expensive building requirements.
The Minnesota YIMBY coalition backed bills last year that would have ended single-family zoning statewide; legalized up to 8 housing units on all lots close to public transportation; prohibited local governments from requiring developers to build a certain amount of parking; and required local governments to streamline the processes for getting a development approved.
Both housing committees approved those bills with votes from Republicans and Democrats, but they died after intense opposition from local government lobbyists and suburban lawmakers, who argued the policies would tie cities’ hands when it comes to planning and zoning. Some greater Minnesota Republicans felt the bills failed to account for challenges in rural communities.
“We heard loud and clear from some of the groups, ‘one size fits all’ isn’t going to work. And we agree, actually,” Rep. Michael Howard of Richfield, the Democratic leader on the House Housing Finance and Policy Committee.
The coalition went back to the drawing board after the 2024 session. Housing committee leaders met with local governments to hash out their differences. Work groups convened on affordable housing and reform of homeowners’ associations.
A changing political environment, and strategy
Last year’s approach — piling dozens of ambitious housing policy proposals into a single bill — didn’t work, even after authors incorporated some feedback from local leaders and rural lawmakers who felt the policies didn’t fit their communities.
This year, housing leaders plan to take a more targeted, incremental approach to building more housing and making homes more affordable, hoping to assuage the fears of local government leaders and hesitant lawmakers.
The political landscape has shifted since last session: The DFL alone no longer controls the Legislature. But with GOP input and support, the bills might have a better chance at passage.
There are also more housing-friendly lawmakers on the state and local government committees.
While Gov. Tim Walz was on the campaign trail as the Democratic nominee for vice president, housing was a key issue — Vice President Kamala Harris was specific in her campaign speeches that the nation has a shortage of homes, and in the vice presidential debate, Walz mentioned “cutting red tape” for developers and pointed to Minneapolis’ ambitious, YIMBY-approved zoning plan that successfully moderated rent prices.
YIMBYs across the nation latched on to this language, declaring the campaign the “first YIMBY ticket in history.”
That language likely came as a surprise to housing leaders in Minnesota, as Walz was not an advocate for the statewide zoning reforms the YIMBY coalition backed last year. The governor may now feel pressure to stick to the language he used on the Harris campaign when it comes to supporting more housing supply in Minnesota.
Encouraging construction of more starter homes
While experts say Minnesota needs more of all types of housing, Minnesotans just starting out are having a hard time finding a starter home.
These could include a wide range of building types: small single family houses, townhomes, duplexes, or even a so-called auxiliary dwelling unit, or ADU, which is a small structure on a shared lot, like a mother-in-law suite or backyard cottage.
Building more starter homes would increase the number of affordable homes available for first-time homebuyers, and provide more options for seniors looking to downsize — potentially freeing up larger homes for families with children.
The “Starter Homes Act,” which has not yet been introduced, is housing leaders’ reworked version of last year’s “missing middle” bill. The Starter Homes Act will be narrower in scope, and is expected to focus on new housing developments. While details of the bill are still being negotiated, it could include provisions requiring local governments to allow townhomes, or multiple houses on a single lot, in new developments.
It could also force cities to allow smaller homes; currently, the vast majority of suburban land is zoned for single family homes only, and in some areas, local governments create lot size, square footage or garage requirements that inflate home sizes and prices.
Howard said the focus on new developments could assuage some concerns from lawmakers worried the character of their existing neighborhoods could change. (At least one other bill will focus on increasing density on existing lots being redeveloped.)
But local governments will bristle at any policy that would tie cities’ hands when it comes to zoning and land use.
“I think there needs to be an ability for cities to make some of those decisions at the local level, to identify where density makes the most sense,” said Daniel Lightfoot, a lobbyist for League of Minnesota Cities.
Cities would prefer the state to take on more of a supportive role in developing more housing — particularly when it comes to building out the infrastructure required for denser development — rather than passing laws that roll back cities’ control over land use, Lightfoot said.
HOA reform
The Reformer has reported in recent months on homeowners who were surprised with massive bills for roof repairs authorized by their homeowners’ associations.
Homeowners around the state have been contacting their representatives in support of HOA reform, Howard said.
Sen. Eric Lucero, R-Saint Michael, co-chair of the Senate Housing and Homelessness Prevention Committee, and Rep. Kristin Bahner, DFL-Maple Grove, are leading a working group on common interest communities and homeowners’ associations. The working group held listening sessions in Twin Cities suburbs, where homeowners shared their frustrations with their HOAs.
At one listening session Bahner characterized HOAs as a “quasi unit of government with very little accountability, lacking in transparency, lacking in checks and balances and very little recourse.”
The working group will release recommendations for HOA reforms to lawmakers by the end of the month, which will form the starting point for legislation introduced on the topic.
Proposed policies could include increased oversight for HOAs and a path for residents to appeal against abusive practices, said Sen. Lindsey Port, DFL-Burnsville, co-chair of the Senate Housing and Homelessness Prevention Committee.
Revisiting the building code and lowering construction fees
As lawmakers look for ways to lower the cost of housing, Republican leaders on the housing committees are pointing to the state building code as a culprit for rising costs.
“It’s incredibly comprehensive and elaborate compared to other states,” said Rep. Spencer Igo, R-Wabana Township, the new Republican lead on the House Housing Finance and Policy Committee.
Even small code changes that shave off a few thousand dollars from construction costs could make a newly-constructed home affordable to more buyers, Igo said. He stressed that he believes building standards can be loosened without significantly reducing construction quality or compromising safety.
Republicans have been making this argument for years, but the housing shortage and spiking costs may finally be delivering a more sympathetic ear from Democrats.
The Minnesota building code is revised every six years by the Department of Labor and Industry with input from an advisory council with representatives from various trades. The next building code takes effect in 2026.
The state took one step towards loosening building standards last year when the Legislature commissioned a study on the safety of medium-sized apartment buildings with just one staircase. Developers and some housing affordability advocates say the single-stair designs are safe, lower the cost of construction and leave room for more apartments.
Lucero also wants to put caps on the fees developers pay to municipal governments during the construction process.
The cost of a permit is dependent on the value of the construction project, he said.
“There is zero relationship between the value of the house being built and the effort that’s required by the building inspector to come out and inspect the property to make sure it’s built to the building code,” Lucero said.
State law already mandates that city permitting and inspection fees be “fair, reasonable and proportionate,” Lightfoot said. Cities would oppose any state-imposed caps on the fees they could charge because they may not be able to recoup the costs associated with inspections, Lightfoot said.
DFL members of the housing committees, while less enthusiastic about the prospect of loosening the building code or capping local development fees, said they’re open to those conversations.