Minneapolis leaders are pushing forward with a requirement that developers include affordable units whenever they build new housing.
The city Planning Commission Committee of the Whole will hear recommendations from an outside research firm Thursday on how to implement a housing strategy known as “inclusionary zoning.” It’s part of the city’s multi-faceted agenda to boost the supply of affordable housing through loosening zoning restrictions, spending more city money on housing and imposing new mandates on developers.
Using similar policies in Seattle, Chicago and Washington, D.C., as a baseline, Grounded Solutions Network recommends the city require developers to set aside 10 to 20 percent of new units for low-to-moderate income tenants. The city plans to pass a temporary ordinance by the end of the year, and adopt a permanent one in 2019.
“This will result in having hundreds or thousands of units that are affordable” with no up-front cost to the city, said council President Lisa Bender.
“The majority of people we’re hearing from don’t want the city to develop in a way that will leave people behind,” she said
Though the policy has not yet been drafted, housing industry representatives say they worry the law will backfire by slowing the construction of housing in a rental market that’s in crisis.
“I get frustrated that we are spending a lot of time discussing regulatory frameworks that interfere with the existing market, rather than saying, ‘How do we grow the market?’ ” said Cecil Smith, immediate past board president for Minnesota Multi-Housing Association.
The ordinance is separate from the hotly debated Minneapolis 2040 Comprehensive Plan, which proposes upzoning the entire city to allow for housing with up to three units, and denser development in more neighborhoods. Bender has identified inclusionary zoning as a necessary partner to that plan, and wants to move quickly.
Bender said the city should have a temporary policy in place when the comprehensive plan is adopted, because they anticipate a rise in rezoning applications.
Affordable housing has emerged as a key issue for city leaders. Mayor Jacob Frey, who took office this year, calls this his top priority, and his 2019 budget proposal includes an unprecedented $40 million in new funds toward affordable housing.
In a statement, Frey said he’s open to inclusionary zoning, if it’s done right.
“As with any new approach, this policy should be crafted carefully to ensure that it complements our other efforts and does not stymie our work to address Minneapolis’ housing shortage and low-vacancy rate, which drive up the costs of housing for everyone,” the mayor said.
“I am committed to working with my colleagues on the City Council as this conversation advances.”
Earlier this year, the city hired Grounded Solutions Network to explore the city’s options and help craft a proposal. The report recommends two options. One requires developers to provide 10 percent of rental units affordable to households earning up to 60 percent of the area median income. The other mandates 20 percent of rental units be affordable to households earning up to 50 percent of the area median income, with developers receiving some public subsidies.
This year in the Twin Cities, 60 percent of area median income for a four-person household is $56,580.
The City Council plans to hold a public hearing Nov. 13 to get feedback on the proposal. The council will have to vote on final language in December.