What's next for Minneapolis' big housing plan after state lawmakers stepped in

Minneapolis officials say new state legislation will put an end to a long-running legal fight over their "2040 Plan," which opened the door to more densely built housing all over the city.

Why it matters: After months of confusion and delays stemming from the lawsuit, Minneapolis officials now want to get back to the 2040 Plan's original goals: alleviate a region-wide housing shortage by legalizing more types of dense housing across the city.

• These included triplexes on any single-family lot and taller apartment buildings in major transit corridors.

Yes, but: The plaintiffs suing over the 2040 Plan aren't giving up, telling Axios they're still planning an appeal to the Minnesota Supreme Court — and that they don't interpret the new legislation as a fatal blow to their case.

• Uncertainty may linger until a court issues a definitive ruling.

What they're saying: "If I'm the banker for those projects [delayed by the lawsuit], there's not a chance in the world I'm going to say, 'Go ahead,'" the plaintiffs' attorney, Jack Perry, told Axios.

The other side: The Minneapolis City Attorney's office doesn't agree, relaying through a spokesperson that "the Legislature's action renders the lawsuit moot."

• A Sierra Club document backs the City Attorney's view, saying the legislation ends the risk that "any city that legalizes new denser housing could be sued on the same basis used against Minneapolis."

Catch up quick: An advocacy group called Smart Growth Minneapolis sued the city in 2018, contending officials never seriously studied the environmental impacts of a building boom.

• In the court fight that's followed, the city has lost several key battles. Last September, a judge blocked the city from using the 2040 Plan — an order that stood until an appellate court reversed it a few weeks ago .

Minneapolis Mayor Jacob Frey told Axios that changing state law to end the 2040 case was the city's "number one priority" at the Legislature this year — even with Minneapolis playing a central role in statewide Uber/Lyft legislation .

• "People often ask, 'Why isn't there more affordable housing in middle- and upper-income areas?'" the mayor said. "The practical answer is, for all intents and purposes, we didn't allow for it" until the 2040 Plan.

The intrigue: Leading DFL lawmakers found the lawsuit absurd , arguing plaintiffs contorted the state's environmental laws to undermine a plan they say will help the environment.

The fine print: Perry said the legislation's final wording was vague — without a specific, retroactive effective date — which he argues means it would not apply to the 2040 Plan.

• In addition, "we have separation of powers," Perry said: The appellate courts already ruled in his clients' favor , and that the Legislature can't simply step in to undo their victory. "It's just too late."
• Axios reached out to other legal experts but they weren't available for comment before deadline.

Between the lines: Even if the new legislation does restore the 2040 Plan, development in the Twin Cities still faces headwinds .

• Interest rates are high and lots of newly built units still need to fill up.

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