Minneapolis Debates Inclusionary Zoning

Jessica Lee reports:

In Minneapolis, the City Council adopted an interim ordinance for inclusionary zoning last December, a vote that coincided with Minneapolis 2040, the city’s long-term plan for development. The ordinance calls for developers of new rental properties to make 10 percent of their units affordable to households that earn 60 percent of the area’s median income (AMI), or $56,580 annually for a family of four. Developers who get tax increment financing from the city, meanwhile, have to make 20 percent of their units affordable to households that earn 50 percent AMI (or slightly more than $47,000 per year for a family of four), which translates to a monthly maximum rent of roughly $1,179. 

Opponents of inclusionary zoning are calling for the city to transition to a tax increment financing (TIF) system to raise money for affordable housing.  Numerous advocates—from the Sightline Institute, George Mason University, local nonprofit developers, and local for-profit developers—are cited in both critiquing inclusionary zoning as an effective policy tool and in suggesting ways that inclusionary zoning can be implemented without stifling development entirely.

Minneapolis hired Portland-based housing nonprofit Grounded Solutions Network to research the city's interim policy and recommend revisions for making the policy permanent.

Grounded Solutions is recommending dialing back requirements from the city’s current policy. Under the recommendations, developers of new rental properties would need to make 8 percent (instead of 10 percent) of their units affordable to households that earn 60 percent AMI, or 4 percent for households that earn 30 percent AMI ($28,300 annually). Developers who get tax increment financing from the city would still have to make 20 percent of their units affordable to households that earn 50 percent AMI or go through other steps to prove that that requirement would hinder the construction project. 

The article also provides thorough treatment of the development and housing affordability context of Minneapolis, as well as the national trend toward adopting inclusionary zoning as an affordable housing development tool.