Walz can’t see the contradictions in his housing policies.
Perhaps Minnesota’s most damaging policies to housing prospects in the state are the strict energy mandates on new buildings.
I n America, housing is mainly a state and local issue. But Kamala Harris’s selection of Minnesota governor Tim Walz as her running mate excited some activists about the possibilities of federal housing reform. They claim that Governor Walz supported the “Yes in My Backyard” (“YIMBY”) movement to reduce zoning regulations and therefore he might recreate the same magic in Washington.
In reality, Governor Walz and his progressive allies supported the usual mishmash of new housing subsidies and mandates. In Minnesota, as elsewhere, they championed worthwhile efforts to modify some housing regulations, but their desire for “equity” and commitment to fighting climate change meant they were happy to impose new and even more onerous regulations. Walz’s housing legacy is not a model to be emulated.
After Democrats took a majority in both houses of the Minnesota legislature, Walz signed a law that made what he called a “generational investment” in housing, amounting to $1 billion. Like many claims of government “investment,” most of it was just cash handouts. In fact, $200 million was allocated to down-payment assistance and tens of millions more to rental assistance. This spending has and will continue to drive up prices for nonsubsidized home buyers and renters. Much of the rest of the money will subsidize developers through grants and loans.
The fact that these massive subsidies would not mitigate the state’s housing problem was made clear last December, when Walz announced $350 million in funding to “preserve and build” 4,700 units of housing. In a state with more than 5.7 million people, a lucky few will get massive windfalls while the rest are left with the bill.
Walz did sign a law that accelerated the City of Minneapolis’s rezoning, which provides the basis for much of the YIMBY crowd’s claims about him deregulating the housing supply. But he and his allies also imposed new housing regulations that advanced progressive goals. Last year, the legislature passed laws that substantially expanded requirements for landlords. The laws mandate that landlords give two weeks’ notice before filing evictions for nonpayment, maintain a minimum temperature in rental units, allow cannabis in their buildings, allow the breaking of a lease for certain medical issues, allow tenant organizing, and so forth. The laws also forbid landlords from evicting tenants for most crimes committed off property or forcing tenants to renew their leases too early.
How all of these mandates can fall under the YIMBY banner of deregulating housing, as some advocates have tried to do, is rather perplexing. But the effects of such mandates on rental prices are not. A recent study showed that increased tenancy regulation led to higher rents and even more homelessness.
Perhaps Minnesota’s most damaging policies to housing prospects in the state are the strict energy mandates on new buildings. The legislature passed, and Walz signed, a law requiring that by 2036 new commercial buildings, including large apartments, use 80 percent less energy compared with earlier this century. As one advocate said, the law moves the state toward a “near zero” emission goal for new buildings. If developers cannot achieve this goal through changing the structures themselves, they will have to include solar panels or other renewable energy sources, further driving up prices. The state passed another law requiring a 70 percent energy-reduction goal for residential buildings.
Despite the YIMBY movement largely focusing on the problems with building-code regulations such as those mandating multiple stairways and overlarge elevators, energy codes like Minnesota’s have done far more to increase housing costs in recent years. Estimates of the added costs of meeting just the national model 2021 residential energy code can range from $9,000 to over $31,000 per new home. The Minnesota laws and proposals go much further. For many households, any supposed savings on their energy bills will be more than offset by higher up-front payments and mortgage costs. The real reason for such mandates is not reducing the cost of living or making housing more affordable; instead, it is pushing a net-zero-carbon agenda at the expense of home buyers and renters.
Walz seems to have embraced the crucial insight of the YIMBY movement that reducing regulations and increasing the housing supply makes housing more affordable. Yet he and his allies are more than happy to impose regulations and increase housing prices when it furthers their progressive goals. The fact that they can’t see the contradiction is concerning.