Minnesota House panel hears broad testimony on housing supply, zoning and slow rollout of 2023 housing funds

The Minnesota House Financing and Policy Committee heard more than three hours of testimony Tuesday on the state of housing, with builders, multifamily managers, city associations and local elected officials all pointing to a shortage of homes, regulatory drivers of cost and delayed state grant programs.

Housing industry representative Mark Foster, vice president of legislative and political affairs at Housing First Minnesota, told the committee that Minnesota is “nearly a 100,000 units short of a healthy housing market” and that the median new single‑family detached home now exceeds $530,000. “Housing affordability is quickly becoming the issue of our time,” Foster said.

Why this matters: witnesses said the shortage spans single‑family and rental housing and is driven by higher interest rates, rising material and insurance costs, local approval processes and infrastructure limits. Several witnesses urged the Legislature to speed grant rollouts and adjust state programs to meet needs in both the seven‑county Twin Cities metro area and smaller Greater Minnesota communities.

Foster and other builder witnesses pressed the committee to reduce local “above‑code” requirements they say add cost without improving safety — examples they cited include local mandates for four‑sided stone exteriors and minimum three‑car garages. Foster told the committee many projects in the Minneapolis–Saint Paul region are approved only through negotiated planned unit developments (PUDs), a step he said adds cost and reduces the number of homes produced. “Roughly 70 to 80 percent of new housing in Minnesota is negotiated by planned unit development,” Foster said.

Representatives of Greater Minnesota cities — including Elizabeth Waifel of the Coalition of Greater Minnesota Cities and Darrylle Damon of the Greater Minnesota Partnership — said their members face different obstacles: market failure where build costs are similar to metro areas but wages and demand differ; the cost of extending roads, sewer and water to greenfield sites; and lender and scaling problems for tax‑credit and federal programs that expect larger projects. Damon and Waifel urged the committee to ensure state programs are tailored for 6–40 unit projects common in smaller cities and to accelerate distribution of infrastructure grants appropriated in 2023.

Cecil Smith, president and CEO of the Minnesota Multi‑Housing Association, said multifamily owners face additional headwinds including rising insurance and property tax burdens, public safety challenges at some properties and refinancing risk as loans come due at much higher interest rates. Smith said the industry paid more than $1 billion in property taxes in 2024 and that insurance costs rose about 25 percent in 2023.

Builders and trade association witnesses including Grace Kelleher and Dale Juntianen of the Builders Association of Minnesota recommended workforce training, streamlined permitting and wider use of prefabrication and other innovations to lower costs. League of Minnesota Cities representative Daniel Lightfoot urged caution about statewide zoning preemption and highlighted local innovation in zoning that some cities are already using to allow smaller lots and accessory units.

Multiple witnesses — including Waifel, Damon and Cap O’Rourke of the Minnesota Association of Small Cities — said a major problem is not only the size of the 2023 appropriations but the slow rollout: the Greater Minnesota Housing Infrastructure Grant Program and other funds have not yet accepted applications, leaving local projects stalled. O’Rourke said small cities are ready to apply but cannot until the Housing Finance Agency issues application materials.

Committee response and next steps: Chair Igoe and other members said the committee will press agencies for timelines and details on the 2023 appropriations and the infrastructure grant rollout. Committee staff said they have already requested schedule information from the Housing Finance Agency and plan a follow‑up “deep dive” on program timing and administrative barriers.

Votes at the meeting: The committee approved the minutes of the previous meeting by voice vote after Representative Mecklen moved to approve; no roll‑call tally was recorded in the transcript.

The hearing included dozens of questions from committee members about zoning, homeowner associations, wetlands and infrastructure costs, and recurring themes were the differences between metro and greater Minnesota needs and the effects of unfunded or delayed state actions on local capacity to build.

No committee votes were recorded on legislation at this hearing.