Minneapolis Housing and Zoning

Some of you likely tuned into the vice presidential debate last week. Tim Walz touted the success of housing policy in Minneapolis, so what did that actually look like? And how can those lessons be applied to the nationwide housing problem?

The key behind Minneapolis’s housing was the Minneapolis 2040 Plan, approved in 2019 and put into place starting in 2020. This was a comprehensive set of 100 policies designed towards the goals of making housing affordable, increasing jobs, and making sure that urban areas fulfill environmental and social considerations.

As all developers know, the primary obstacle to building housing is zoning. If a particular area is zoned to only allow single-family homes (SFHs), then the amount of development that can occur in that area is limited, as SFHs are large relative to their number of residents. There’s a fundamental density limitation which prevents SFHs from solving the housing problem in cities.

The 2040 Plan upzoned Minneapolis in two ways. First, it requires residential areas which were SFH zoned to allow the building of duplexes and triplexes. This policy had very little impact on actual development because the rules required these homes to have the same floor-to-area ratio (FAR) as SFHs to prevent them from being larger. This placed significant design constraints on duplexes/triplexes to the point that they weren’t worth developing.

A much more successful initiative was multifamily zoning on through streets, which the 2040 Plan calls “corridors”. These streets have bustled with business activity for ages, but their growth was stunted by their SFH zoning. The FAR requirements for corridor housing were relaxed, which allowed larger apartment buildings with 20-50 housing units to be constructed. This type of construction was the vast majority of housing that was permitted and built.

There’s one more deregulation that developers say has been instrumental here: the elimination of citywide parking minimums. Minneapolis, like many other cities, used to require apartments in some areas to have parking. This meant that developers had to build additional parking structures, which studies show adds about $50,000 in per-unit development costs. It’s no wonder growth was stunted with such a massive burden on developers.

What was the impact of this? Between 2017 and 2022, rents in Minneapolis stayed the same, when rents in Minnesota in general rose 14%. The levels of homelessness over the same period dropped 12% in Minneapolis and rose 14% in Minnesota. High rent and homelessness are the most pressing issues in the U.S. related to housing policy, so the plan can be considered a resounding success and a model for similar cities.

What do you think of these policies? Should they be implemented in your city?

Read the linked analysis: Minneapolis Land Use Reforms Offer a Blueprint for Housing Affordability.