Minneapolis city leaders act to make housing in the city less affordable

The Twin Cities have an affordable housing problem as the result of excessive taxes, fees, and regulations that effectively make it illegal to build affordable housing there. Occasionally, when I have made this argument, people have responded by asking, “What taxes, fees, and regulations?” It is a fair question, and I have offered examples in the past. Now, the city leaders of Minneapolis have just given a live, real-time demonstration of the process at work.

Last week, the Star Tribune reported:

Minneapolis leaders want to increase fees on residential and business electric and natural gas bills to help pay for the city’s plan to reduce its contribution to climate change.

The envisioned fee hikes would generate between $8 million and $10 million annually to pay for weatherizing homes, installing solar panels and other programs — resulting in a tripling of the city’s current spending on those items, Mayor Jacob Frey and a host of officials announced Wednesday.

Details of the proposal, including exactly how much the fees would rise for utilities customers, are still being worked out, Frey said. But he estimated the additional cost would be $8 to $12 annually per household, on average.

The plan would hike the city’s franchise fee, found on every gas and electric bill as a percentage of the bill. The City Council and the mayor have sole power over those fees; no action by the Public Utilities Commission or other body is required to raise them.

The announcement comes as the City Council on Thursday is expected to adopt the city’s Climate Equity Plan, an update of Minneapolis’ 10-year-old Climate Action Plan. The new climate plan includes a series of goals over the next 10 years to achieve the larger ambition of the entire city being carbon neutral by 2050.

The gas and electricity fee hike proposal announced Wednesday, dubbed the Climate Legacy Initiative, is at the core of how to pay for the ambitious climate plan.

The proposed fee hikes, an expansion of the franchise-fee-for-climate-action funding stream that went into effect in Minneapolis in 2018, appears to have broad support on the City Council. The legislative process will likely take months and include at least one public hearing after specifics are released.

If all goes according to plan, the fee hikes will take effect Jan. 1.

Here we have the same people who prattle about a shortage of affordable housing and demanding that the government spend millions of taxpayer dollars to fix the problem acting deliberately to make housing less affordable in the first place. Government is very largely the art of creating a problem and then spending ever increasing amounts of money to fail to fix it.

“Its only $8 to $12,” I hear you say. So it is, for now. But this comes on top of a mountain of other taxes, fees, and regulations. On July 17, the Minneapolis Planning Commission voted on a proposal to restrict exterior building materials; staff argued that the new restrictions would improve aesthetics and durability, but also admitted that they would increase housing costs (the proposal was continued to the October 2, 2023, City Planning Commission meeting.)

You may think that regulations designed to save the world from climate change or improve “aesthetics” are justified. And, if so, you have to acknowledge that less affordable housing is a price you are willing to pay — or have someone else pay.