Dear Neighbors,
As one of a number of housing and zoning experts who contributed insights into the development of the front page “Zoning Divide” article in the Star Tribune, I was able to take the opportunity to formally announce my own Comprehensive Housing Affordability Act bill at a press conference on Monday morning, resulting in follow-up stories in the StarTribune and the Minnesota Reformer on Tuesday morning. Also, keep an eye out on Almanac as I’m scheduled to appear and discuss housing affordability this Friday.
I have been working on this bill for almost two years – it’s in its fourth draft right now – and includes a number of contributions from other legislators, especially my Senate partner, Rich Draheim, a Republican from Madison, Minnesota. Rich brings a developer’s perspective to the table while I contribute the local government perspective based on my years as a Planning Commissioner, City Councilmember, and Housing and Redevelopment Commissioner in Bloomington, and as a Metropolitan Council representative for Bloomington, Edina, Richfield and Hopkins. If you read my 2019 “Flaming Hoops” op-ed piece in the StarTribune, you’ll understand where I’m coming from with this bill.
It has been widely reported that the cost of new housing units is skyrocketing due to shortages of key resources, which are driving up their prices, including:
- Developable Land
- Lumber and Other Building Materials
- Labor
Building material costs and labor shortages will resolve themselves in the marketplace over time – the price of lumber is already plummeting; however, the shortage of developable land is an enduring institutional problem -- there is no actual shortage of land. According to the Minneapolis Area Association of Realtors, the median cost of a lot for a new single-family home has increased from $93,000 to over $195,000 since 2012, and that’s just the price of the land! Typically, the price of the finished home is 3 ½ to 4 times the price of the land that it sits on. As a result, no new “starter homes” for newly forming young families are being built anywhere in the Twin Cities. The American dream of a house with a yard is currently out of reach for an entire generation of new families.
At the same time, cities are strapped for the cash needed to construct the roads and other basic infrastructure needed to support additional housing units. In the absence of a dedicated funding source, cities are resorting to a variety of extraordinary measures to avoid having to pass the related infrastructure costs onto existing city property taxpayers by …
- Using the zoning process to slow the growth of housing development
- Promoting the construction of more expensive homes which will pay higher property taxes
- Attempting to cover infrastructure costs indirectly, by overloading various fees and by negotiating payments through a process called “Planned Unit Development”, under which the zoning code is thrown out the window and everything is negotiable.
The guiding principles behind my bill are:
- New development should “pay its own way” (but no more than that).
- The housing development approval process must be streamlined.
- We must provide enough new, affordable workforce housing to provide shelter to every family in our growing population.
My bill proposes a “deal” between the cities and the housing developers under which cities would be allowed to directly assess developers for the cost of infrastructure needed to support their housing development using:
- Development Impact Fees (mostly in newly developing areas)
- Street Improvement Districts (mostly in redeveloping areas)
In exchange, cities would relinquish regulatory tools currently used to limit the supply of land available for the development of relatively affordable housing and would be limited in their ability to treat other fees and dedications as profit centers.
The current draft of the bill is now circulating among stakeholder groups for comment, including groups representing the cities, the homebuilders, affordable housing advocates and the business community; and will undoubtedly undergo many changes before it is formally introduced during the September special session of the legislature and again in February at the beginning of the 2022 regular session.
I expect that the final version of the bill will have both Democratic and Republican cosponsors in both the House and the Senate and will pass during the 2022 regular session.
A detailed synopsis of the bill, the bill, itself, and a nonpartisan Bill Summary from House Research can be found here.
If you'd really like to understand the current demographic and economic factors underlying our current housing shortage, I highly recommend listening to this Minnesota Reformer podcast interview with Libby Starling of the Minneapolis Federal Reserve Bank. Libby is the region’s foremost authority on this topic.
This is one of my most important legislative initiatives and your comments and suggestions are welcome.
Keep in Touch
Don’t hesitate to reach out if I can provide any assistance. Please follow me on my Facebook page for further updates and invite your friends and family to do so as well.
Thanks for the honor of representing you at the Capitol.
Sincerely,
Steve Elkins
Representative, District 49B
Minnesota House of Representatives
515 State Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155
(651) 296-7803