ST. PAUL — Minnesota’s housing bills came up short in 2024 following a historic bill in 2023. With a split Legislature and a tight budget, what lies ahead for affordable housing in the 2025 session is up in the air, but advocates say demand is high.
In 2024, half of all renters found housing unaffordable in Minnesota, and cost-burdened households in the state rose from 590,538 to 641,549, an increase of 9% from 2023, according to Minnesota Housing Partnership’s report. With 2.26 million households in Minnesota, according to the U.S. Census Bureau, that means almost a third of the state’s households are cost-burdened.
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Last session, one of the bills that gained the most traction to address these climbing numbers was the “missing middle housing” bill. The bill would have required cities of a certain population to allow more types of housing at greater densities by authorizing what is called “middle housing types.” Examples of these include duplexes, buildings of up to six units, or townhouses.
Daniel Lightfoot, senior governmental relations liaison with the League of Minnesota Cities, said while his organization recognizes and sees the housing demands across the state, the bill they saw last session raised concerns about a “one-size-fits-all” model.
“The concern from the city perspective was … (the bill) really broadly preempted city zoning and decision-making authority,” Lightfoot said. “What works for Rochester is not going to be the same thing that works for Bemidji or Pipestone. … So, it’s important that legislators and policymakers understand that there needs to be scalability and flexibility, and that we retain that local decision-making authority.”
Sen. Larry Kraft, DFL-St. Louis Park, co-author of the “missing middle” bill, said he didn’t see the bill as one-size-fits-all and recognizes local authority but called to attention the importance of statewide oversight on housing.
“One city can’t address the problem,” he said. “It’s bigger than them. It requires a statewide view and a statewide thought process to address the scale of the problem. If one city does great stuff and everyone around them doesn’t, it’s going to make what that one city does not effective, because they’re going to build a bunch more housing, everyone’s going to swamp in and drive the prices up.”
The 2024 session was the first time Minnesota saw affordable housing legislation like the missing middle housing bill. Rep. Mike Howard, DFL-Richfield, co-chair of the House of Representatives Housing Committee, said while other states already implemented similar legislation, it was a good start to the discussion for Minnesota.
“Last session was really the first time we had a really in-depth conversation at the Legislature about the state’s role to support the production of more homes and land use and zoning forms — things that have traditionally been thought of as exclusively governed by city governments,” he said.
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He said last year legislators formed one of the largest coalitions he’s seen for housing with partners like labor unions, faith leaders, for-profit housing builders, the Minnesota Chamber of Commerce and more. He said what he thinks stopped the bill in its tracks was the short session and it being the first time an idea like missing middle housing was brought to the table.
Kraft and Howard said it’s too early to say what bills will resurface in the upcoming session that begins Jan. 14, but they’re looking at legislation around affordable housing and are hopeful it will stay a bipartisan priority in the session.
“We’re in the process of developing legislation, and it will be informed by a lot of the conversations we’ve had with cities,” Howard said. “It won’t look exactly the same as what was introduced last year, but there’s still some conversation to be had."
Last session, the Legislature also a bill that aimed to combat income discrimination in housing but to housing affordability programs.
What’s happening with the $1B passed in 2023?
The $1 billion passed in 2023 was set aside for first-time homeowners assistance and to build more multi-family homes. The investment was the largest in state history, Howard said. Before that, the state had only designated housing funds of up to $100 million.
Howard said while a good portion of these funds have already been allocated, Minnesotans likely won’t see the effects of those projects for some time.
Even with $1 billion out and recently allocated, Lightfoot said, the demand for more assistance across the state continues.
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“It’s important that we don’t just check the box and say, ‘We did $1 billion. We’re done,’ ” he said. “The need is great. And, you know, a billion dollars sounds like a lot, but when you talk a lot of the headwinds in terms of construction costs, labor, materials and land, it’s really important that we continue to see those resources be appropriated.”
He called to attention appraisal gaps in Greater Minnesota as an example.
“It takes more resources from a developer to build something than that development will ultimately appraise for, and so we don't have that return on investment in Greater Minnesota in many cases, or the desire for development in some of our more rural or Greater Minnesota cities, as you do in the metro,” Lightfoot said.
Cristen Incitti, president and CEO of Habitat for Humanity Minnesota, said her organization is hopeful housing will continue to be a priority with divided Legislature and tight budget ahead.
“We all recognize that our state-elected leaders have a big challenge in front of them,” she said. “What I think we’re really focused on is that housing affordability was a main campaign priority up and down the ticket, from local jurisdictions to even at the federal level.
“So, we’re finding it optimistic that it is impacting everyone across the state, and that no matter your role in our government you’re hearing from your constituents that affordable housing and access to affordable ownership is a critical issue.”
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