City appeals recent ruling on 2040 Plan

September 15, 2023

Today, the City of Minneapolis submitted a notice of appeal of the recent ruling of the Hennepin County District Court regarding the Minneapolis 2040 Comprehensive Plan (2040 Plan). The City is appealing the ruling to avoid reverting back to the expired 2030 Comprehensive Plan, which would make the City noncompliant with State law, increase uncertainty in the housing development process, and slow the production of multi-unit affordable housing. 

The 2040 Plan includes 14 goals with an overarching theme: Minneapolis’ growth must be managed with a focus on undoing barriers created by a history of policies that have prevented equitable access to housing, jobs and investments, and that have resulted in significant racial disparities. The 2040 Plan features nearly 100 policies with action steps outlining ways to achieve the plan’s goals.

“A big part of keeping housing affordable is increasing the supply of housing,” said Mayor Jacob Frey. “We’ve invested in record amounts of affordable rental housing production in Minneapolis, limited rent increases to just 1% for the past five years and have been credited with keeping inflation way below the national average. We’ve done all of this – and have allowed for a diversity of housing options in all neighborhoods – because of the 2040 Plan.”

“The 2040 plan was supposed to enable our efforts to increase housing production and a range of affordability all across the city, and it was doing just that,” said Ward 5 City Council Member Jeremiah Ellison. “We’ve seen cluster developments, ADUs, and townhome developments on the Northside that are helping us achieve just that, and these projects would not be possible under our old comprehensive plan. In the case of Harrison Townhomes, we’re not just talking about affordable rental being impacted, we’re talking about affordable homeownership and the opportunity for Northside families to build equity. Defending 2040 is a racial justice issue as much as it is a housing production and affordable housing issue.”

The 2040 Plan provides the policy support to combat significant barriers to home ownership and affordable rental housing development. The court ruling disrupts Minneapolis Homes Financing, a program dedicated to creating affordable home ownership opportunities. Since the adoption of the 2040 Plan, the City has committed $31 million to produce 222 affordable homeownership housing units where 75% of the buyers are Black, Indigenous or People of Color (BIPOC) residents. The ruling also disrupts a record amount of affordable rental housing production that increases choice across all neighborhoods of the city—a production level recently credited with keeping rent increases at just 1% and helping to combat inflation in Minneapolis.

The 2040 Plan also provides policy support to advance the City’s work to address the climate crisis. Strategies in the City’s Climate Action Plan will be compromised with this ruling. Inherent in the comprehensive planning process are measures to manage population growth and potential environmental impacts. Best practices support concentrating growth in urban centers to allow for dense walkable mixed-use communities, reducing land consumption per person. The approach achieves efficient transportation, utility, and energy consumption systems, preserves greenspace both in the core and on the edges of the region, increases opportunity for building efficiency, and reduces vehicle miles traveled and carbon emissions.

Housing projects that will be impacted

There are currently 55 units of affordable rental and ownership housing in the development pipeline that will not be built if this ruling stands, and another 69 units of affordable housing which have been approved but may not be able to receive building permits. Under the 2040 Plan, the City has produced 256 units of affordable rental and ownership housing, which would not have been allowed under the 2030 Plan and this court order.

For example, the Harrison Townhomes, currently under construction by Twin Cities Habitat for Humanity, would not have been allowed under the 2030 Plan. The Harrison Townhomes were one of the first homeownership projects approved through Minneapolis Homes Financing, which utilized the higher density allowed under the 2040 Plan. The project is 17 units of perpetually affordable homeownership townhomes affordable below 60% AMI.

The ruling will also impact the City’s affordable multifamily housing production at a time of tremendous need. The City is evaluating the extent of specific impacts to the production pipeline and the number of units lost. For example, the Minneapolis Public Housing Authority (MPHA) scattered site expansion project, which creates 84 units of rental housing, 64 affordable to households below 50% AMI, would not be permitted under this ruling.

The City program that would be most impacted is Minneapolis Homes Financing, which is dedicated to creating affordable home ownership opportunities through one- to 20-unit residential development. Projects in the Minneapolis Homes Financing pipeline will be significantly disrupted by the court order. 

Minneapolis Homes Financing works to assist BIPOC renters to eliminate racial disparities in homeownership. 75% of the buyers of Minneapolis Homes Financing are BIPOC. Since 2020, the City has committed $31 million to produce 222 units of affordable homeownership housing through Minneapolis Homes Financing. 

A portion of those Minneapolis Homes units are through missing middle projects of two to 20 units. 11 of the 41 missing middle projects currently in the Minneapolis Homes pipeline will not be able to proceed under this court order. 90% of the affected missing middle projects are led by BIPOC developers creating affordable home ownership housing. The City has committed $9 million of resources to the affected projects, which will be at risk of loss if the projects do not proceed.