As the legislature moves into its third month of the 2023 session, Minnesota’s crisis-level housing supply challenge took its first step forward.

Rep. Steve Elkins (DFL-Bloomington) authored HF 2235, a zoning modernization bill, calling it the ‘Legalize Affordable Housing Act’. The measure cleared its first hurdle, passing out of the House of Representatives Housing Committee.

“We need more housing at all price points of all types and we’re not getting it because it’s not permitted to be built right now,” stated Elkins. As is the case throughout much of the United States, Minnesota finds itself with more households than available homes.

This foundational problem continues a cycle that drives home prices and hurts the state’s economic competitiveness. The barriers to building affordably priced homes is at the center of the state’s housing supply deficit, which experts say is as much as 95,000 housing units short of the demand.

Industry leaders say that HF 2235 has many provisions that would directly address these challenges, pointing to a series of barriers that make affordably priced homes all but impossible to construct in this market. HF 2235 attempts to address some of the major barriers, including
outdated zoning standards and aesthetic mandates on new homes.

The measure also proposes to add new street impact fee authority for local governments, which drew opposition from industry groups.

“It’s a positive step that this bill was heard and took its first step forward, but there are issues to resolve on the impact fee portion and a long road ahead”, said James Vagle, CEO of Housing First Minnesota.

Local government groups opposed the zoning modernization efforts at its first hearing, but a local city council member testified in support of the measure.

“I think the question presented for everyone is state legislation necessary to preempt cities on local zoning. And my position from my experience in Minnetonka is, yes. I believe too many cities hide
behind the phrase of local control that restricts the supply of housing,” stated Bradley Schaeppi, Minnetonka City Council member.

Prior to the measure’s early March hearing, the legislature had previously elected to focus on other priorities relating to housing. Data shows that Minnesota has the highest new home costs in the region and among the highest new home costs in the country.

When comparing the average new single family home costs, new Minnesota homes cost on average $80,000 more than Wisconsin and Illinois.

The bill now moves to the State and Local Government Finance and Policy Committee. The legislative session continues throughout the spring and is set to adjourn in late May.