VOL. 7 ISSUE 2, JUN. 2023
THE MINNESOTA HOUSING INDUSTRY NEWS SOURCE BY HOUSING FIRST MINNESOTA • HOUSINGINDUSTRYNEWS.ORG
Judge hears building permit profit lawsuit
INSIDE THIS ISSUE
The suit alleges millions of dollars were collected by municipalities by overcharging permits and inspection services. Hennepin County Judge Francis Magill heard arguments in the lawsuits alleging the cities of Corcoran and Dayton overcharged for new residential building permits. The lawsuits were brought by Housing First Minnesota, publisher of Housing Industry News. The April 7 hearing covered both cases and comes nearly two years after the lawsuits were filed. Separate cases, similar arguments While both cases were heard together, involve the same underlying case law and were raised by the same plaintiff, these are two separate court cases. The suits against the cities of Corcoran and Dayton allege the cities inflated the cost of building permits above the cities’ costs for inspection and plan review. Minnesota uses a feefor-service model for building permits. State law requires these building permit fees to be “fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed.” At the April 7 hearings, Magill heard arguments in both cases simultaneously. From 2018 until 2021, Housing First Minnesota alleges the city of Corcoran collected more than $2.5 million in surplus building permit revenue, which was then placed into the city’s general funds and was used to pay for municipal development projects. During the hearing for the city of Dayton, the discussion was similar. According to court filings, the city was accused of over-collecting $2.9 million for the years 2018-2021, with all but $200,000 diverted to the city’s 409 Fund. “As our briefs illustrated and our attorney highlighted in today’s hearing, both the cities of Corcoran and Dayton were overcharging CONTINUED >> PAGE 6
Bloomington to enact zoning reform PAGE 4
Homebuilder sentiment rises PAGE 12
Housing First Minnesota Foundation Gala breaks records PAGE 18 The housing bill signed by Gov. Walz and the Minnesota Legislature allocates more than $1 billion to housing programs over the next biennium, but fails to include transformational zoning modernization.
Legislature takes a pass on zoning reform, focuses on state funding for housing With a housing market facing generational challenges in supply and affordability, the Minnesota Legislature chose to allocate state funds to an array of housing subsidies and support programs. All told, the Legislature and Gov. Walz signed off on a housing bill with more than $1 billion dedicated to housing programs over the next biennium. The new law also includes a metro sales tax which would increase taxes in the seven-county metro area by a quarter-cent to fund state-based vouchers and housing programs run by local governments. Largely absent from the debate was transformational zoning modernization, which has been the centerpiece of housing legislation throughout the country for states grappling with similar housing challenges. Industry leaders lamented the narrower approach of the Legislature. “Passing a major funding bill for housing was a significant accomplishment, but not pairing it with zoning modernization
legislation was a miss,” said James Vagle, CEO of Housing First Minnesota. The lone zoning modernization discussion came late in the session and was limited to one legislative hearing, with the Legalize Housing Affordability Act being heard and passed out of the House of Representatives Housing Committee. Authored by Rep. Steve Elkins (DFL-Bloomington), the bill contained several key issues to limit outdated and unnecessary homeowner mandates, while returning home size and aesthetic choices to homeowners. Nearly a dozen testifiers spoke in support of large portions of the bill, while representatives of local units of government spoke in opposition. “Minnesota suburbs, like many local governments nationwide, use zoning to curate which types of people can move to town,” said Salim Furth, a housing policy expert with the Mercatus Center at George Mason University. “This is an inappropriate use of government power and tramples on property rights and fair housing principles.”
The bill passed out of its first committee, but it was not debated after its initial hearing. The Minnesota Senate held no hearings on zoning modernization during the 2023 session. The Legislature’s focus on housing funding yielded large investments in several programs. Housing Bill funding highlights: • $200 million for down payment assistance programs. This includes $150 million for first-generation down payment assistance. • $200 million for housing infrastructure investments. • $95 million for the Economic Development and Housing Challenge Program to support new workforce housing. • $40 million to support workforce housing and infrastructure in Greater Minnesota.
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DFL passes wage liability law Broad construction industry opposition to a liability shift for payroll and wages was brushed aside by DFL leaders as part of a sweeping collection of changes long favored by Democrats and labor unions. The statute, originally authored by Sen. Judy Seeberger (DFL-Afton) and Rep. Sandra Feist (DFL-New Brighton), provides that a contractor “has assumed a subcontractor’s liability . . . for the full payment of wages, gratuities, and overcompensation.” The language also requires subcontractors to provide payroll, wage and benefit information, if requested, to any upstream contractor. CONTINUED >> PAGE 11
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