News Updates

When the City of Minneapolis passed its celebrated 2040 Plan, it was hailed nationally as a groundbreaking, progressive blueprint to increase density and drive down housing costs. By eliminating single-family-only zoning, ending parking minimums, and opening the door to gentle density like duplexes and triplexes, the city set out to solve its housing shortage.

However, opening up land use rules on paper is only half the battle. A new report from the Federal Reserve Bank of Minneapolis highlights a growing disconnect between policy goals and economic realities: while the 2040 Plan opened up zoning, a web of other local requirements and rising development costs have made it extraordinarily hard for new housing projects to “pencil out” without additional financing.

Combined with sobering statewide data from the National Association of Home Builders (NAHB), the picture is clear: from urban apartments in Minneapolis to single-family homes across Minnesota, housing affordability has hit a structural wall.

The Multifamily Crunch: Why Developers Are Walking Away from Minneapolis

According to research and developer interviews gathered by the Minneapolis Fed, local builders view the city as one of the most challenging environments in which to construct and operate housing. While individual policies are designed with good intentions, their cumulative weight acts as a major financial tax on new construction.

Permitting Has Collapsed

The numbers tell the story. Minneapolis saw multifamily permitting fall 91.6 percent from its recent peak in 2022 to a low in 2025. After permitting more than 3,000 multifamily units a year in several years between 2018 and 2022, and peaking at 4,646 units in 2019, the city permitted just 1,043 units in 2023, then 351 in 2024 and only 300 in 2025. The last time Minneapolis permitted that few new multifamily units in a year was 2008, the bottom of the Great Recession.

The gentle density the 2040 Plan allowed has so far added little by comparison: 317 units in duplexes, triplexes and fourplexes from 2020 through 2025, about 2 percent of the 12,335 units permitted in larger multifamily buildings over the same years.

1. Inclusionary Zoning Creates Large Funding Gaps

Under the city’s inclusionary zoning policy, market-rate apartment developers must restrict rents on a portion of their units.

• For a two-bedroom unit reserved for a household earning 60% of the Area Median Income (AMI), capped rent and utilities top out at $1,776/month.
• One developer told the Minneapolis Fed that level of rental income supports construction costs of only $150,000 to $175,000 per unit.
• With current construction costs closer to $325,000 per unit, inclusionary zoning leaves a gap of at least $150,000 per affordable unit.

For a 100-unit building with 8% of units income-restricted, that becomes a funding gap of over $1 million before breaking ground.

2. Mandatory First-Floor Retail & Height Minimums

Developers describe mandatory ground-floor retail as another tax on new housing, because in many places the demand isn’t there to fill the space. Height minimums in certain areas also require expensive steel-frame construction (replacement cost of $400,000–$500,000 per unit) instead of more cost-effective wood-frame buildings (about $300,000 per unit), blocking less costly building types.

3. Buying Is Cheaper Than Building

Because construction and debt are so expensive, developers can purchase existing buildings at a fraction of what it costs to build new ones:

• Steel-framed towers sell for about $300,000/unit vs. $400,000–$500,000 to replace.
• Wood-framed complexes sell for about $250,000/unit vs. $300,000 to replace.

When buying an existing property yields a better return than building a new one, private capital is pushed away from new construction.

4. Regulatory Uncertainty Chills Capital

Discussions around rent stabilization, coupled with stronger renter protections and longer eviction timelines, have scared away some national investment. Lenders and investors worried about those risks may require larger cash reserves, forcing developers to raise more equity or delay construction.

Not Just Minneapolis: National Headwinds, Local Pile-On

To be fair, these local requirements land on top of challenges facing apartment builders everywhere: higher construction, borrowing and operating costs, and, in Minneapolis, slower population growth. The Minneapolis Fed also notes that no single policy is likely to tip the scales on its own, and that research commissioned by the city did not find that inclusionary zoning by itself blocks new building. The problem is cumulative: each added cost makes a thin-margin project harder to finance, and together they make new development in Minneapolis harder than in most places.

The Statewide Reality: Single-Family Ownership Out of Reach for About Two-Thirds of Minnesotans

The development freeze in urban apartments is only half of Minnesota’s housing crisis. For families aspiring to buy a single-family home, today’s mortgage rate from Freddie Mac and affordability estimates from the National Association of Home Builders (NAHB) paint an equally difficult picture:

• Median New Home Price in MN: $402,209
• 30-Year Fixed Mortgage Rate (Freddie Mac, October 8, 2026): 7.40%
• Income Needed to Qualify for a Home Loan: between $132,537 and $137,941 (NAHB estimates at 7.0% and 7.5%)
• Households Locked Out of Ownership: between 66.6% and 68.5% (NAHB estimates at 7.0% and 7.5%)

NAHB’s Priced-Out Calculator uses a 6.0% baseline (which gives $122,025 and 62.1%) and assumes a 10% down payment and housing costs of no more than 28% of household income. Freddie Mac’s 7.40% falls between NAHB’s 7.0% and 7.5% scenarios, so the ranges above bracket today’s rate.

Out of Minnesota’s 2.4 million households, roughly 1.6 million families do not make enough income to qualify for a median-priced new home at today’s rates. The table below shows the household income brackets at NAHB’s 6.0% baseline:

Even at NAHB’s 6.0% baseline, only about 38% of Minnesota households earn the $122,000+ needed to buy a median-priced new home. At today’s rates, roughly one in three can.

And affordability is moving in the wrong direction. In September, the Federal Reserve raised its benchmark interest rate by a quarter point, and mortgage rates are climbing: Freddie Mac reports the 30-year fixed-rate mortgage averaged 7.40% as of October 8, up from 6.30% a year ago. NAHB’s calculator, which starts from a 6.0% baseline, shows what higher rates mean. At 7.0%, the income needed to qualify for the median-priced new home rises from $122,025 to $132,537, and the share of Minnesota households unable to afford it climbs from 62.1% to 66.6%, pricing out another 107,783 households. At 7.5%, the income needed climbs to $137,941, 68.5% of households cannot afford the home, and 152,796 more are priced out. Today’s 7.40% average sits between those two scenarios, which puts the share of Minnesota households unable to afford the median-priced new home somewhere between 66.6% and 68.5%. If rates reach 8.0%, the income needed rises to $143,434, 70.1% of households cannot afford the home, and 192,763 more are priced out.

Conclusion: Good Intentions Aren’t Enough

The zoning changes in the Minneapolis 2040 Plan were a necessary first step toward tackling our long-term supply deficit. However, zoning reform cannot exist in a vacuum.

When cities layer on strict inclusionary zoning mandates, first-floor retail requirements, height minimums, and an unpredictable regulatory environment, they create a market where constructing new rental units makes little financial sense. Meanwhile, rising interest rates and high home prices continue to lock about two-thirds of Minnesotans out of homeownership.

If state and local policymakers want to turn the tide on affordable housing, they must address the supply side of the equation—simplifying regulations, easing cost burdens on builders, and creating predictable environments where new housing can actually get built.

Sources: Federal Reserve Bank of Minneapolis, “Minneapolis 2040 Plan indicators point to stable rents, stalled development” (October 2026); Freddie Mac, Primary Mortgage Market Survey (October 8, 2026); National Association of Home Builders, Priced-Out Calculator.

By Grace Schwab Keliher, Executive Vice President, Builders Association of Minnesota

Yesterday, I had a front-row seat in Ramsey County District Court for a hearing that felt less like a routine administrative challenge and more like a pivotal moment for Minnesota constitutional law.

At the center of the case is the massive, 1,425-page “Jumbo” Omnibus bill passed by the Minnesota Legislature—and whether the way it became law violates the Minnesota Constitution’s Single Subject and Single Title Clause.

Presiding over the hearing was Judge Leonardo Castro, who was already intimately familiar with this legislative process. In 2025, Judge Castro struck down the binary trigger ban hidden inside the same 2024 omnibus bill on identical single-subject grounds—a ruling that was upheld by the Minnesota Court of Appeals.

Yesterday’s proceeding made one thing abundantly clear: Judge Castro’s frustration with the Legislature’s procedural shortcuts has only grown.

1. The Plaintiffs’ Argument: “The Best Example of Log-Rolling in History”

The courtroom featured a heavy-hitting legal lineup representing business and policy groups:

• Jack Perry (Taft Law), representing F&H, led off by asking the court to strike down the Paid Family and Medical Leave (PFML) provisions or invalidate the bill in its entirety. Perry anchored his oral argument in history, charting a timeline of single-subject cases back to the Minnesota Supreme Court’s 1919 decision in State v. Women’s and Children’s Hospital, in which the court voided an entire legislative act. Perry tracked the Jumbo Omnibus bill legislative journey, noting that it reached the House floor styled simply as a bill “relating to taxes,” completely concealing the eight other omnibus bills crammed into the 1,425-page conference report. The title was only altered by the Revisor of Statutes after the Legislature had already adjourned.
• Nick Nelson (Upper Midwest Law Center), appearing with Doug Seaton pushed on the notice issue. He emphasized that the state judiciary is the only institution left to protect citizens from unconstitutional legislative overreach. When asked by Judge Castro whether a bill’s title is required to appear at the very beginning, Nelson noted that a title’s position at the top is fundamentally implied—and that using catch-all titles like “State Government Operations and Finance” to connect all the omnibus bills together in the Jumbo Omnibus bill strips the constitutional single subject/ single title clause of all real meaning.
• Tom Revnew, representing BAM (Builders Association of Minnesota), ABC (Associated Builders and Contractors), NFIB (National Federation of Independent Business), and J&M Consulting, focused on the Misclassification provision. Revnew pulled no punches, labeling the bill “the best example of ‘log-rolling’ in history.” He pointed out that the AG’s office had said during the earlier Gun Owners case that it would appeal single-subject rulings all the way to the Minnesota Supreme Court. Instead, the State did not seek Supreme Court review of the Court of Appeals’ ruling, and the time to do so has now passed, so the decision stands—and the 43 words banning binary triggers remain severed and struck down.

2. The Attorney General’s Defense: Strategic Decisions and Resource Limits

Assistant Attorney General Emily Anderson defended the statute on behalf of the State. Her position relied on several key arguments:

1. Procedural Correction: She pointed out that the updated, descriptive title appeared on page 1,425 and that the 4th draft sent by the Revisor to the Governor contained the finalized title.
2. Timing & Remedy: The State argued that the plaintiffs waited too long to bring their challenge (a point Tom Revnew later rebutted by arguing that Minnesota’s six-year limitations period applies). She urged that if the court found fault, it should sever only specific provisions rather than taking down the entire bill—warning that striking the entire act would be “astronomically hurtful to the public.”
3. The “Common Thread”: The State maintained that “State Government Operations and Finance” served as the unifying constitutional bridge connecting all policy areas in the bill.

3. Judge Castro’s Questions and “Enlightenment”

Judge Castro did not hold back during questioning. He made his skepticism of the Legislature’s tactics plain, at one point commenting directly that the Legislature “should be ashamed of their actions” in ignoring the single-subject and single-title rules.

Key moments from the bench:

• On Notice: Judge Castro pressed Assistant Attorney General Anderson on why the title wasn’t corrected before the House and Senate voted, asking why the Legislature seemed so intent on withholding transparent notice from the public and rank-and-file lawmakers.
• On Legislative Secrecy: The judge voiced sheer frustration over how a bill could possibly be deemed constitutional when, in reality, only the six conference committee members truly knew everything that was packed inside it.
• On Watching the Vote: Judge Castro shared that he had watched the video recordings of the House and Senate passing the bill, describing the process as “like watching sausage being made.”
• On the AG’s Appeal Strategy: In a striking moment during the hearing, Judge Castro asked the AG’s office directly why they chose not to take the earlier Gun Owners decision to the Minnesota Supreme Court. He noted that had they pursued that appeal, the state would have definitive guidance today rather than re-litigating the exact same single-subject arguments. Anderson responded that the choice was a “strategic decision” driven by agency resources (a point that drew quiet reactions in the room, given the AG office’s staff of more than 400 employees). Anderson added that the State lost only 43 words out of a 1,425-page bill, so in the State’s view it was not a big deal, and the State will let the Gun Owners decision stand.
• On Meaningless Titles: When the AG argued that State Government Operations and Finance tied everything together, Judge Castro asked whether a title has any remaining constitutional meaning if it can stretch far enough to cover everything from K-12 education policy to energy standards.

What Happens Next?

The State concluded by requesting a stay of any adverse ruling pending appeal. As we await Judge Castro’s formal decision, the shadow of his previous ruling hangs heavily over this case. In his 2025 opinion in the Gun Owners case, Judge Castro wrote:

“Out of respect and deference for Minnesota Supreme Court precedent favoring severance wherever possible, this Court will go no further than severing the Binary Trigger Amendment from the 2024 Omnibus Bill. But make no mistake, during the late hours of May 19, 2024, lawmaking did not ‘occur within the framework of the constitution.’ This Court respectfully suggests that if there has ever been a bill without a common theme and where ‘all bounds of reason and restraint seem to have been abandoned,’ this is it; and if there has ever been a time for the ‘draconian result of invalidating the entire law,’ that time is now.”

Whether Judge Castro decides that “that time is now” to strike down the entire 1,425-page megabill—or once again sever provisions like PFML and worker misclassification piece-by-piece—this hearing made one thing clear: Minnesota’s long-standing reliance on omnibus log-rolling is facing its most serious constitutional reckoning in generations.

BAM, together with co-plaintiffs the Minnesota Chapter of Associated Builders and Contractors (ABC), the National Federation of Independent Business (NFIB), and J & M Consulting, has filed a reply brief responding to the Minnesota Attorney General and the Department of Labor and Industry (DLI) Commissioner on our motion for summary judgment. We are asking a Minnesota state judge to strike down a new law meant to stop construction companies from misclassifying workers as independent contractors rather than employees.

We aren’t just fighting the worker law itself. We are challenging how the Legislature passed it. BAM argues that the Minnesota Legislature broke state constitutional rules by cramming dozens of completely unrelated laws into one massive, last-minute bill known as the “Jumbo Omnibus.”

Key Arguments Made by BAM

1. “You Already Lost This Argument in Court” (Offensive Collateral Estoppel)

• The concept: In plain terms, this rule says that if a court already ruled against you on the exact same issue in an earlier case, you can’t come back to court and re-argue it against someone else.
• The argument: Judge Castro, the judge in our case, also presided over a very similar earlier case (Minnesota Gun Owners), where the state conceded, and the court entered final judgment, that this same “Jumbo Omnibus” bill violated the state constitution’s single subject clause. The state chose not to appeal. BAM’s position: the state already conceded this mega-bill is unconstitutional once, so the state shouldn’t be allowed to pretend otherwise now.

2. “You Can’t Cram Unrelated Laws Together” (The Single Subject Rule)

• The rule: The Minnesota Constitution requires every bill passed by the Legislature to embrace a single subject.
• The argument: The “Jumbo Omnibus” contained at least 13 unrelated topics, including gun laws, energy policy, mineral taxes, veterinary licenses, sports, and construction labor rules. The state argued that all of these topics fit under the broad label of “running state government.” BAM counters that almost any law involves state government, so if that excuse worked, the single subject rule would be meaningless.

3. “The Bill’s Name Hid What Was Inside” (The Title Clause)

• The rule: A bill’s title must give the public and lawmakers fair notice of what the law actually does.
• The argument: Right before the midnight deadline, lawmakers swapped the bill’s title for a generic description about “state government operations.” No ordinary person reading that title would ever guess it contained a sweeping new law changing how construction companies must classify their workers.

4. “Don’t Delay the Injunction” (Opposition to a Stay)

• The argument: The state asked the judge to delay the ruling if it loses, so it could keep enforcing the worker law during an appeal. BAM argues that this request was made improperly, without the required legal filings, and that the state shouldn’t be allowed to keep enforcing an unconstitutional law.

What BAM Is Asking the Judge to Do

1. Rule in BAM’s favor without a full trial (summary judgment).
2. Sever the construction worker misclassification law from the rest of the mega-bill.
3. Issue an injunction stopping the state from enforcing the worker misclassification penalties.

The case: Minnesota Chapter of Associated Builders and Contractors, Inc., et al. v. Perushek and Ellison, Ramsey County District Court, Court File No. 62-CV-26-2185 (Judge Leonardo Castro).

Oral arguments are scheduled for October 1, 2026, at the Ramsey County Courthouse. Questions? Contact Grace Keliher at (651) 646-7959 or info@bamn.org.

Top Color Trends Shaping Homes in 2026

The new year is finally here, and that means many homeowners are thinking about their next projects. But whether you’re interested in a full remodel or just brightening up a few walls, choosing the right colors for your home can be tricky. Luckily, the top paint manufacturers have released their leading color picks for 2026 to spark ideas for your next update.

Neutrals and rich, luxurious hues dominate the list, but greens are trending up, too. What do you think fits your home best? Here is each brand’s 2026 Color of the Year.

Neutrals

Neutral colors are often a favorite for their timeless, flexible looks, especially in large rooms with lots of wall space or for accent pieces throughout the home.

• Universal Khaki from Sherwin-Williams is a mid-tone tan that’s a reliable choice for common areas with its classic look.
• Melodious Ivory by Dutch Boy is a soft, creamy neutral with warm undertones that brings charm to any area.
• Special Walnut from Minwax is a warm medium brown wood stain that highlights the natural tone of wood pieces.
• Epernay by C2 is a pale yellow that gives a space color even in a neutral setting.
• Cloud Dancer from Pantone is a natural white that provides a calming influence on any room.

Luxurious Hues

Many homeowners are turning to deep, luxurious hues to bring personality and an elegant feel to their homes.

• Divine Damson from Graham & Brown is a deep garnet inspired by the tones of ripe damson and figs.
• Silhouette by Benjamin Moore blends rich espresso hues with refined notes of charcoal.
• Matte Coffee Bean by Krylon is a deep, rich brown with earthy tones.
• Hazelnut Crunch from Clark + Kensington is a warm reddish-brown inspired by cozy minimalism design.
• Warm Mahogany by Glidden is a rich red that’s draws attention and makes a statement.

Greens

Greens are gaining popularity every year for their natural, calming feel, especially dark tones that offer a break from traditional home colors.

• Hidden Gem from Behr is a smoky jade that elevates interiors with depth and a calm presence.
• Midnight Garden by Dunn-Edwards is a deep, muted green with earthy undertones.
• Warm Eucalyptus from Valspar is a green hue with warm undertones for interiors and exteriors.

Struggling to decide what’s best for your next project? Reach out to our regional Executive Officers to connect with an industry professional who can help.

• Lisa – hbalisa@paulbunyan.net
• Natalie – builders@lakeregionbuilders.com
• Grace – info@bamn.org
• Jim – jhcllc@outlook.com
• Penny – info@vikingland.builders.com
• Hannah – westcentralbuilders@tds.net