10-04-2025
House housing budget includes incentives for zoning reforms
The Minnesota Capitol. Photo by Max Nesterak/Minnesota Reformer.
A budget bill passed by the state House housing committee Wednesday would prioritize funding for communities whose rules allow for multifamily housing construction, and don't require certain size, parking or aesthetic requirements for new developments.
The bill (HF2445, as amended) instructs the Minnesota Housing Finance Agency to 'prioritize applications for projects located in jurisdictions that have policies conducive to developing residential properties' in its competitive grant and loan programs.
The agency would prioritize cities and counties that:
Allow multifamily housing in at least 75% of the area zoned for commercial use.
Allow duplexes, townhomes or detached apartments in at least 75% of the area zoned for single-family housing, and allowing developers to get permits for those buildings using the same process and standards as single-family homes.
Do not require more than one parking stall per unit of housing.
Do not require lots to be bigger than one-eighth of an acre.
Do not require certain aesthetics, materials or garage sizes.
'This is providing a carrot — not a mandate, but a carrot — to cities to update their own policies in a way that will make it easier to build more homes,' said Rep. Michael Howard, DFL-Richfield, who is co-chair of the House Housing Finance and Policy Committee.
The policies prioritized in the budget bill are similar to those backed by housing leaders in both parties, plus religious groups, labor unions and housing developers. Those policy bills passed in both housing committees, but have not yet received hearings in the state and local government committees, where similar legislation died last year after intense opposition from city leaders.
Big-picture budget negotiations between the DFL-led Senate and tied House are still ongoing, but both chambers indicated they would like to give the state housing agency a small funding boost, while looking for large cuts elsewhere.
The budget bill passed by the housing committee would allocate:
$500,000 in one-time funding for a statewide hotline to educate and advise renters.
$150,000 to establish a new task force on accessible housing.
$20 million in one-time funding — more than double the funding in the current budget — for grants to greater Minnesota cities for the cost of extending sewer, water, streets and other infrastructure.
A $30 million one-time boost for the Family Homeless Prevention and Assistance Program, in addition to the program's $10.7 million in ongoing funding.
Ongoing funding for existing programs that finance the development of workforce housing, affordable rental housing, manufactured home infrastructure and housing rehabilitation; and programs that provide rental assistance, homeowner education and support to homebuyers.
