Minneapolis developers clash with City Council over housing rules

Minneapolis developers and City Council members clashed Wednesday over a plan that would require new housing complexes to include below-market-value units.

While the language for an "inclusionary zoning" ordinance is still in the works, members of a developers coalition called Building Minneapolis Together showed up to a City Council committee meeting to say they've been left out of the process. That includes Steve Minn, a downtown developer who accused the council of "legislating against market forces."

"We're concerned that your policy could — probably likely will — have the complete opposite effect on production and preservation of affordable housing," Minn told the council members. "We're trying to convey that message to you, and we think we're being ignored."

Steve Cramer, president of the Minneapolis Downtown Council, also part of the developers coalition, warned that an overreaching policy could make it unfeasible to build in Minneapolis and exacerbate the underlying problems contributing to rising rents.

"It's really important in our view to think this through again," he said.

The council members appeared unmoved, including Council President Lisa Bender, who accused critics of espousing "disingenuous rhetoric."

"I'm a little disappointed when we hear folks that we spend so much time with come and talk to us like we've never met before," said Bender. "I don't know how many times a developer has told me they couldn't possibly build a building and follow our rules, and then magically came back with a building that was feasible and did follow our rules."

Inclusionary zoning is separate from the Minneapolis 2040 Comprehensive Plan, which eliminated single-family zoning and allows for more types of housing across the city. But several council members committed to the idea during last year's debate over the 2040 plan to ensure that new construction would indeed beget more affordable units, rather than simply open the door for more high-end buildings.

The City Council passed a temporary inclusionary zoning ordinance in concert with the 2040 plan with the intention of working out the details for the long term by the end of the year.

Last October, a research firm called Grounded Solutions Network recommended two policy changes to the council. One would require developers to provide 10% of rental units affordable to households earning up to 60% of the area median income. The other mandates 20% of rental units be affordable to households earning up to 50% of the area median income, with developers receiving some public subsidies. In 2018 in the Twin Cities, 60% of area median income for a four-person household was $56,580.

At Wednesday's meeting, the City Council Housing Policy & Development Committee focused on a new report from Grounded Solutions Network on the pros and cons of possible inclusionary zoning policy alternatives.

During the public comment period of the meeting, members of the developers group spoke out against the fundamentals of the plan.

"Input from developers has been built into the process from the beginning," she said.