Is all politics local?

Affordable housing and the tyranny of local government.

The separation of powers between the federal and state governments not only serves as an important check to federal encroachment on individual liberties, but allows the states, as U.S. Supreme Court Justice Louis D. Brandeis wrote in 1932, to act as laboratories of democracy, whereby “a single courageous state, if its citizens choose” could “try novel social and economic experiments without risk to the rest of the country.” One only needs to glance at the differences in governance between states like Florida and Minnesota to see this in play. In the same way, local governments — a de facto third level of the federal system — allow experimentation by giving power to the people over decisions closest to them. As they are more responsive to people’s needs, local governments more readily allow voters to create the types of lives, neighborhoods, cities or towns they envision. But what happens when local control becomes a tool for tyranny? Housing is one such case.

According to data from Realtor.com, in the last quarter of 2024, the Twin Cities region tied for the fourth highest housing costs among the 10 most populous non-coastal metros in the U.S. Specifically, the median home in the Twin Cities cost $425,000, only surpassed by Dallas, Phoenix, and Denver. The Twin Cities ranked number one in the Midwest, with the median home costing $50,000 more than the next most expensive metro — Kansas City. Adjusted for income, the Twin Cities was tied for the fourth most expensive metro in the Midwest, behind Cincinnati, Columbus, and Kansas City.

Minnesota’s relatively unaffordable housing is a long-standing issue. In 2019, before the coronavirus pandemic, a Housing Affordability Institute study found that the price of “a new home in Lake Elmo, MN” was “$47,000 more than its identical home in Hudson, WI” — two cities that are only 10 miles apart. In the same study, “a new home in Victoria, MN” cost $82,000 “more than a similar home built by the same builder in the SW Chicago suburbs.” This is partly due to excessive fees and regulations — particularly at the local level — that delay and prevent new housing development, restricting the supply of available homes, and raising prices. From zoning and land use rules to park fees and aesthetic mandates, local governments have put home ownership out of reach for low- to middle-income Minnesotans, particularly younger residents, substantially straining their budgets in the process.

Multifamily housing, even of moderate density, is illegal to build in commercial zones and large swaths of residential zoned areas of some Minnesota cities. But even in places where it is permitted, it is subject to stringent height and density restrictions. For example, Minneapolis liberalized zoning regulations with the 2020 passage of the Minneapolis 2040 plan. This legalizes denser housing — such as triplexes — in many parts of the city previously restricted to single-family housing. The city, however, requires a maximum Floor Area Ratio (FAR) of 0.5 for single-family zoned lots — a law passed in 2007, which means that the total floor area of a housing unit must not exceed half the square footage of the lot it is built on. This, in addition to other restrictions such as height limits, renders triplexes impractical despite being legal to build. While developers could seek variances, that discretionary approval process is uncertain, costly, and time-consuming.

Compared to Minneapolis, St. Paul went a step further by significantly reducing minimum lot sizes and abolishing single-family zoning. In H2 and H1 zones, minimum lot sizes per unit are 1,000 and 1,500 sq. feet, respectively, compared to the previous requirements of 5,000 to 9,000 sq. feet. However, to meet the 45 percent maximum lot coverage in the H1 zone, building a triplex with three family-sized units (1,500 sq. feet per unit) would still require a lot of at least 4,500 sq. feet. Buildings in H1 and H2 zones are also subject to a 35-feet maximum height, and four to five maximum units per lot. Developers can build more than five units if some units are “affordable,” which puts an unnecessary restriction on housing development.

Unlike St. Paul and Minneapolis, smaller cities are still maintaining many problematic zoning rules. When combined with aesthetic requirements (front porch mandates or bans on vinyl siding) and other land use regulations such as minimum lot size requirements and parking mandates, these zoning rules increase the complexity and cost of housing development outside of Minneapolis and St. Paul. In a study released early 2024, the Federal Reserve Bank of Minneapolis surveyed 10 Twin Cities suburbs — including Blaine, Bloomington, Minnetonka, and Maple Grove — and found that seven require more than one parking spot per unit of multifamily housing. The estimated cost of parking spots ranged from $3,000 to $10,000 per surface lot space and $30,000 to $50,000 per structured spot. These cities also require developers to set aside between $1,500 to $8,000 per unit for park fees.

Local control is a significant and indispensable part of our federal system of government. Preempting local housing policy, as was proposed in the 2024 legislative session, creates an additional layer of separation between voters and government and undermines local governance, which is objectively more responsive to voters. However, by going beyond broad land use segregation and dictating what kind of housing can be built and where, how large lots and homes must be, and how housing should look, local governments have inadvertently restricted opportunities and personal freedoms for Minnesotans. To deliver long-lasting and substantial results, housing reform must deal with these restrictive local rules.