Minneapolis’s Residential Upzoning Risks Unintended Consequences: Alissa Luepke Pier

Minneapolis is now being cited by the New York Times and West Coast YIMBYs as the city that’s “boldly” tackling the housing crisis and inequality by ending single-family zoning. What’s the context for those news reports?

Alissa Luepke Pier: What those headlines are referring to is the latest version of the city’s comprehensive plan. Every 10 years, the city is required to adopt a comprehensive plan that is approved by the Metropolitan Council. It’s a very extensive series of guidelines that shape the way we’ll build and recraft our zoning policies in order to create a more sustainable city for the decades to come.

One major element of our latest comprehensive plan, which was recently approved by City Council, is the universal upzoning of all formerly single-family and duplex lots to allow triplexes by right. If the plan is approved by the Metropolitan Council, Minneapolis will no longer have any single-family zoning.

To be clear, triplexes will not be the minimum density permitted on single-family lots; rather, anyone will be able to build up to a triplex on any single-family lot, regardless of context, lot size, or existing structures on the site. There will no longer be a situation in which a developer asks the city for a variance to create a triplex on a single-family lot, and the city has the option of saying no. Going forward, a triplex can be created on any residential lot in the city by right.

What was the genesis of this sweeping component of the comprehensive plan?

The Long-Range Planning Department wanted to approach this comprehensive plan in a different way than we have in the past. It started from a good place: The city wanted to achieve equity, or at least stop contributing to further inequity. Research has shown that the impacts of our city’s historic racial inequities—in terms of redlining and how we regulated where people could or couldn’t live—have lasted for generations, impeding people’s economic stability and opportunities to build generational wealth. The problem is that I don’t think blanket upzoning will address these inequities in the way its advocates think it will.

Mayor Frey was recently quoted as saying that these policies produced a precise harm, and therefore we need a precise solution. Somehow, that precise solution became a completely dull instrument that we slapped down on the entire city.

Before further addressing Minneapolis' new housing policies, share your professional background and current role with Minneapolis city planning.

I am a practicing licensed architect and the vice president of the Minneapolis Planning Commission. I’ve served on the commission for over a decade and am currently its most senior member. I don’t work for the city; I’m an appointee and a North Minneapolis resident of more than 20 years who tries her best to institute good urban planning for the city. I did extensive research into the history of zoning and planning and its impact on North Minneapolis when I wrote my graduate thesis on Architecture and Game Theory 17 years ago, and am convinced that complex problems that we are facing in our society today require creative problem-solving based in critical thinking and thorough analysis, with an eye to long-term impact and changemaking.

Minneapolis is nationally respected as a center for regional governance and healthy civic debate. Before the vote to eliminate single-family zoning, was there much due diligence on the part of elected and appointed officials on whether this change would achieve its intended goals?

No, I wouldn’t say so. We did a good job of sharing out information; the Long-Range Planning Department partnered with artists to create lots of innovative things, which they deployed through dozens of community meetings. But, as much as we’ve patted ourselves on the back for doing “authentic engagement” around the comprehensive plan, when it came to actually gathering information from stakeholders, there wasn’t a lot of wiggle room to incorporate community feedback into the final plan.

Moreover, many of the most controversial policies in the plan, including the elimination of single-family zoning, have not been vetted through an economic lens. The policy took as its starting point that more units automatically equals more affordability, and there wasn’t any interest in delving into whether or not that was actually a factual equation on which to base major decisions. The policy does not cite any research to support its assertion, nor does it even lay out any aspirational goals regarding the extent of the impact they hope to achieve (such as in anticipated added units, or even in theoretical decreases to housing costs). Without any sort of concrete metric, it is impossible to analyze the policy's effectiveness in achieving its goal of improved housing affordability. That is convenient when what one is proposing is a vague, one-size-fits-all solution with no real statistical support linking it to its presupposed conclusion.

Because we chose this false assumption as the foundation and justification for our crafting of city policy, however, this also meant that, if you spoke against the policy, the automatic assumption was that you were against affordable housing. For me, nothing is further from the truth. I’m very pro-density and pro-affordable housing. I’m not coming at this issue as a NIMBY from a wealthy neighborhood who is concerned about more people living nearby. I really believe that we need to look at whether this policy will improve housing affordability or have an equitable impact on our city’s residents. After all, as more people move into the city, we’re seeing housing prices continue to rise despite an increase in units being built, primarily in the downtown area.

We don’t have any safeguards for this proposed policy, and once we enact these rights, they’re grandfathered in forever. There is no contingency plan, no method to test effectiveness, and no metrics for success. The consequences of a policy like this on a community like mine are far too harmful to be glossed over in the name of innovation. Let me be clear: Adoption of this policy without adequate safeguards will cause great, long-term harm to low income families and communities of color, and there is no way to undo the damage once Pandora’s box has been opened.

As a seasoned planning commissioner, what policy and enforcement safeguards would you typically expect in a new residential zoning policy like this one?

My concern is that it might be too late to dial this momentum back. Having touted this policy as an earth-shattering idea that no one has done before, the city may not want to backtrack.

But, even if the city doesn’t want to back away entirely from the proposed upzoning, there are still a variety of safeguards they could put in place to mitigate the unintentional harm that this policy will cause to communities like mine. For example, they could amend the policy to allow triplexes by right, but only on currently vacant lots—of which there are hundreds throughout our city. This would add the desired density without some of the negative consequences to the community and it’s existing housing stock.

The city could also explore the possibility of an either-or: allowing developers to either build to the current zoning (single-family or duplex) or build a fourplex—with no option like a duplex or triplex in between. Why? Because a fourplex triggers the requirement for an architect and for sprinkling, which would indicate that the developer is thoughtfully improving the property and making meaningful investment, rather than just trying to maximize investor dollars while running an existing structure into the ground.

The best safeguard, in my opinion, would be an owner occupancy requirement: allowing people throughout the city to build new or convert their own homes into duplexes or triplexes and rent out the additional space. This idea is sometimes poopooed, but the fact is that many people succeed in getting a foothold into homeownership because of rental income from their home that supports their mortgage payments and improves their financial sustainability.

Given  your experience with land-use planning and city-building, are you concerned about outside investors without a long-term stake in the livability of these communities buying into Minneapolis neighborhoods?

Over the two decades I’ve lived in North Minneapolis, I have seen the toll that absentee investor landlords have taken on our community. A lot of my neighbors are living paycheck to paycheck; they’re classified by the city as extremely cost-burdened, meaning that they spend a significant portion of their paycheck on housing costs alone. At the same time, North Minneapolis is home to over 40 percent of our city’s problem properties (those designated Tier 2 and Tier 3)—and a full 75 percent of the entities that own those problem properties don’t live in North Minneapolis. Unfortunately, the majority the data shows that a disproportionate percentage of owners and operators of rental properties in my area are not responsible landlords.

We’re seeing investors come in, run the housing stock into the ground, treat the tenants like garbage, and immediately take all their rental income—money that could be invested in the community—out of the neighborhood. This is an immediate capital flight from the community, leaving local residents without the expendable income to invest in local opportunities or support local businesses.

I’m fearful that blanket upzoning will exacerbate this problem, which, so far, our regulatory services haven’t been able to control. I also worry that it will deny homeownership opportunities to the very people whose housing problems we’re claiming to try to solve: low-income families and people of color. Currently, a lot of absentee investors in Minneapolis shy away from single-family homes because they aren’t as profitable and they cost more money to maintain. But with the new policy, a potential first-time homebuyer in my community will suddenly have to compete with an investor from another state who’s looking to buy the place sight unseen, slice it up into three units with minimal improvements, and start renting it right away. Those investors are not looking for homes, but for cash flow opportunities. How can a first-time homebuyer who currently resides in my community compete with someone who views it as a triplex income stream? The answer is: They can’t. They will be out-bid every time, further denied the opportunity for home ownership in the community they live in.

What will happen in the long run is that we’ll end up with smaller units (as we see existing housing chopped up to create triplexes in our less affluent neighborhoods), in poorer shape (because the goal of an absentee investor is to maximize profit, and there is little consequence for failing to properly maintain a safe living environment for tenants)—yet there’s no indication at all that they will go for a lower price. To summarize: In an effort to alleviate the affordable housing crisis, the city is offering my community smaller, crappier housing for no less money, with the added insult to injury of making it harder for them to buy a house and build generational wealth within their own community. It’s shocking to me that we’re patting ourselves on the back for this.

As of the last few years, the largest residential real estate owner in metropolitan California is the global equity firm Blackstone. Are similar changes in residential ownership happening in Minneapolis?

Yes. I’ve heard from realtors specializing in North Minneapolis that they are being contacted by firms on the West Coast, in Florida, Missouri, Texas, and elsewhere who are looking to buy up multiple parcels at a time, sight unseen. Those interests are chomping at the bit for this policy to pass. It saddens me that we would take ownership opportunities away, not only from the immediate community, but from the region as a whole, in favor of global investors.

What is your reaction to national public relations campaign related to your city's elimination of residential zoning?

From a strictly political strategy standpoint, it’s brilliant. The best thing to do is to inundate the media with trite talking points so that anybody who speaks against them is viewed as a NIMBY—rather than analyzing whether the policy is actually going to help the people we claiming it’s going to help. I’m disappointed we, as a city, chose to go that route rather than having a meaningful, honest discussion about the potential for this policy to be abused. If we really cared, that’s what we would do.

Good intentions are one thing, but at some point, the rubber hits the road. It’s the details that will define whether or not this policy will be effective.

Instead of being the comprehensive plan that finally addressed Minneapolis’s equity issues, this could very well make those issues worse and set us back 10 or 20 years. Unfortunately, by the time we find out how catastrophic this might be for my community and others like mine, the people that made these decisions will have moved on, and another generation of my neighbors will be denied an opportunity to grow wealth and have stability within the community.

This is history repeating itself—just like the planning mistakes we made in the 1960s, ’70s, and ’80s. You can’t make decisions in a vacuum and decide not to examine them from all angles because you think you know better as an educated planner or politician. We as a city must act as stewards for all our citizens, especially those of our most vulnerable, and do everything possible to ensure that our actions are actually in their best interests. It’s not enough to have good intentions. We need to roll up our sleeves and do the hard work of ensuring this won’t cause harm to those we have a moral obligation to serve.

The California State Legislature recently advanced a bill to essentially prohibit cities from regulating housing developments, and debated another that would have given the state control over local land-use and zoning regulation. What advice would you offer to the California planners and legislators who are considering a path forward that mirrors the supply-oriented approach that was adopted in Minneapolis?

The people who should be at the table making these decisions are the people who lay their heads down on pillows in the zip codes that will be most affected. Well-intentioned people making these decisions from afar are never going to come to the right solution in a vacuum of like-minded people who have lived the same life experiences. The world is full of urban planning failures that started with the best and most noble of intentions. If you want to make real, actual change, you have to be willing to do the hard work to ensure that the cure isn’t worse than the disease, and that means being open to diverse opinions on the matter and addressing concerns about how this will play out in real life. And yes, sometimes that means that what seems like a genius, novel idea just doesn’t work when viewed through a lens of reality. We need to set our well-intentioned egos aside in those instances and do what is right—not just what is the right soundbite. We just can’t be so willing to sacrifice our citizens at the altar of our own municipal ego.

We need to look at policies like this from all angles. We can’t just have an optimistic, pie-in-the-sky, best-case scenario view; we have to identify what could go wrong. One thing we have observed about human nature is that there are always people out there who are just looking to make a dollar and don’t care who they’re harming on along the way. We need to look for ways to mitigate that possibility. That critical eye is missing from this dialogue.

I’d also say: Don’t be afraid to admit you’re wrong. Another thing missing from this conversation is that no one wants to back down. Instead of jumping to attack people speaking out, actually ponder where they are coming from. To not listen to the voices, hearts, and souls of people who are concerned—to not find out what motivates them—is a huge missed opportunity. What a great waste of time, money, and energy it would be to enact a policy that might very well set your city back farther than where you started from. And what a heavy price our most disenfranchised citizens will have to bear for generations as a result.

Who pays the price for such indifference to legitimate concerns? The very communities who are used to justify the “innovative” change in the first place. If you are enacting change in the name of others, it seems morally irresponsible not to examine that change from every possible angle and study its impact on those same communities before pushing it through. We can brand it with whatever buzzword we want, but if the end result is just a perpetuation and exacerbation of housing and economic inequities, should it really be lauded as “innovative”?