To Fix Its Housing Crunch, One U.S. City Takes Aim at the Single-Family Home

Minneapolis’s answer to rising prices is meant to foster density and racial equity.

By Noah Buhayar - Bloomberg Businessweek - July 31, 2019

(excerpts from full article below)

The crowd at the Bauhaus Brew Labs was thick with flannel and knit beanies, with the odd “Beto for President” T-shirt thrown in. But the handful of patrons gathered by the glass garage doors of the cavernous Minneapolis taproom in March weren’t regulars. They’d turned out for the kickoff of a website called vox.MN. Their nametags said things like “I [heart] my neighborhood.” Another had a circle with “2040” inside and a line running through it, like a no-smoking sign.


That was a reference to Minneapolis 2040, the sweeping new urban plan local officials approved in December. Spelled out in a more than 1,000-page document, it makes this city of 428,000 one of the first and largest in the U.S. to end single-family zoning, which applies to 70% of Minneapolis’s residential land. Developers will soon be able to build duplexes and triplexes without going through the time and expense of applying for a variance or confronting the kind of neighborhood opposition that often stymies such projects.

Yet for all the fanfare, some residents in Minneapolis are seething over what happened. In the runup to the vote, they clashed with a well-organized and diverse group of proponents, flooding the city with comments. Red lawn signs warned ominously that neighborhoods of single-family homes would get bulldozed to make way for apartment buildings.

The nametag folks at the Bauhaus Brew Labs were certain the effort would end poorly. Mary Pattock, who served as communications director for the city’s first black mayor in the 1990s, said she and other white homeowners who campaigned against the zoning changes were made to look racially insensitive. “It’s kind of like Trump,” she said, clearly as an insult. “He doesn’t really say, ‘I hate black people,’ but he’s giving out those messages. That’s the way this plan was set up. It was set up to polarize on the basis of race.”

As the two sides battled into the fall, the public remained sharply divided. A review by the Star Tribune of a sample of the more than 18,000 comments collected by the city showed that critics outnumbered supporters 2-to-1. Worthington, whose staff reviewed all the feedback, said those in favor had an edge.

The reality on the ground is, of course, more nuanced than the dueling lawn signs make out. “From the front, we designed this to look like a single-family home,” says Bruce Brunner, standing outside his latest project in south Minneapolis. The framing is done, revealing a roofline that fits with the stately, century-old homes that line the street. Instead of housing one family, though, each floor of the three-story building will be a separate 1,247-square-foot, three-bedroom, two-bathroom apartment.

On principle, Brunner is a fan of the 2040 plan, which will clear away some of that red tape. He lives in a nearby duplex and supports the city council’s social goals. Still, he’s skeptical that upzoning single-family neighborhoods will translate into a massive business opportunity. Small projects like his are too idiosyncratic for most big developers to bother with. Even for smaller players, triplexes often don’t pencil out; construction and land costs are too high compared with the rents a landlord can expect to charge. For most lots in the city, Brunner says, “the equation doesn’t work.”

The real estate industry has its doubts. The council seems to think the affordable units will “just come out of developer’s hide,” says Steve Cramer, president of the MPLS Downtown Council, who brought together for-profit and nonprofit developers to weigh in on the policy. Last year the group estimated the industry needed to sink more than $3 billion into housing just to make up for a decade of underbuilding in Minneapolis and an additional $1.3 billion every year to keep up with population growth. It’s unlikely developers will appear with that kind of money, given the current policy. “That’s the fundamental fallacy of this,” Cramer says. “These projects just won’t get financing.”

Developers are raising some valid concerns, says Andrea Brennan, the city’s director of housing policy and development. Still, Minneapolis wouldn’t have gone through “all this trouble to create this very permissible development environment if we didn’t want development,” she says. “The question before us really is, who benefits from growth?”

Refer to full Businessweek article here.