In an effort to address growing housing affordability issues, Minneapolis, Minn. recently enacted two major policies.
This policy requires that 10 percent of units be affordable at 60 percent of area median income, or 20 percent of the units be affordable at 50 percent of area median income (AMI) if the development receives a city subsidy.
In order to lower the costs of housing for those at or under these AMI requirements, renters and homebuyers in other units in the same development would face higher housing costs, as these buyers and renters pay for the subsidized portion of the “affordable” units on top of their own housing costs.
David Siegel, executive director of Housing First Minnesota, said in a letter to the city of Minneapolis that while the city and Housing First Minnesota share the goal of increasing housing affordability, this proposal will have the opposite effect.
“The proposed inclusionary zoning requirement will negatively impact the housing industry and those who seek homeownership opportunities in Minneapolis and beyond,” said Siegel.
Siegel added that the proposal is unlikely to achieve these goals for several reasons:
• The inclusionary zoning concepts embedded in the proposal pass higher costs on to households who buy market rate homes, forcing them to pay higher prices.
• The proposal acts as a tax on market rate homes at a time when broad affordability measures are needed for all Minnesotans across the housing ecosystem.
• The proposal will have a chilling impact on the willingness of developers to engage in projects within the city of Minneapolis, shifting development elsewhere.
In place of the proposal, Housing First Minnesota suggested the city examine ways to truly reduce the cost of housing in Minneapolis, including substantial zoning flexibility, regulatory reform, and innovative financing.
The End of Single-Family Zoning
Additionally, Minneapolis approved a new plan that allows greater density throughout the entire city. Under this proposal, which still needs to be approved by the Metropolitan Council, triplexes would be allowed in areas that had been limited to single-family homes.
Additionally, the plan reduces parking mandates and endorses raising building height limits for apartment buildings near transit.
“We applaud Minneapolis for its efforts to allow the housing market to provide a greater variety of options to consumers,” said Siegel. “This does help alleviate Minnesota’s affordability crisis. More options create more opportunities and help the entire housing ecosystem.”