Despite beginning the session with seemingly irreconcilable positions, state DFL and Republican lawmakers found a path last week to agreeing on a $165 million housing policy bill.
Given tight margins and the parties’ disagreement over the state’s priorities in a year that saw economic and social disruptions due to Operation Metro Surge, there was no guarantee that the final product would include tens of millions of dollars in rental assistance, affordable home construction, and improvements to manufactured homes.
“It seemed highly improbable at the start of the session that anything would pass” that dedicated significant resources towards affordable housing, said Margaret Kaplan, associate director of the Center for Urban and Rural Affairs at the University of Minnesota.
Most initial DFL proposals focused on alleviating the pain of the federal immigration crackdown, which propelled rent debt by as much as $51.3 million in January and February, according to CURA research published earlier this year. This had the effect of doubling statewide rent debt and putting thousands of households on the precipice of eviction.
Photos by Ellen Schmidt/CatchLight Local/Report for America
Republican lawmakers refused to pin the blame for Minnesotans’ economic troubles on Metro Surge and rejected the idea that specific remedies were required in the wake of the operation.
On top of these ideological differences, legislators were wary of dipping into the general fund during a time of uncertain future state budgets and waning federal financial support.
Bridging these gaps required significant relationship-building between the DFL and Republican co-chairs of the House Housing Policy and Finance Committee, where this bill originated.
“Rapport would be an understatement,” Rep. Spencer Igo, R-Hibbing, said of the relationship between himself and Rep. Michael Howard, DFL-Richfield.
They made a point to visit each other in their home districts, one on the Iron Range, one in the Twin Cities. They said this allowed both to get a taste of the communities the other represented and their uniquely diverse housing needs.
“We represent different areas of the state, but we both share a deep desire that homes need to be more attainable and reachable for people across Minnesota,” Howard said.
Where did Minnesota lawmakers find money for housing?
That shared vision was the basis for a bill that ultimately included both parties’ priorities.
The final bill included $40 million of the rental assistance DFL lawmakers wanted, $100 million of housing infrastructure bonds meant to spur the creation of affordable homes, $4 million dollars to prop up frontline homelessness relief efforts that have been scaled back at the federal level, and $4 million to improve infrastructure in manufactured home parks.
But asking for funding for this would have been anathema to some members.
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“If we were going to find a way to pass a supplemental [housing] budget, we needed to be able to go to both Republican and Democratic leadership and say: Listen, we found a way to invest in Minnesotans without affecting our general fund,” Igo said.
The funding was secured by repurposing unused money set aside for settlements arising from unconstitutional property seizures and reclaiming interest earned on taxpayer dollars held by the Minnesota Housing Finance Agency. These existing state resources were then used to leverage an additional $100 million in Housing Infrastructure Bonds.
Having the bill be budget-neutral took away a talking point that could have sunk the bill’s chances to see the bipartisan support it did, Igo said.
Greater Minnesota housing carve out was key to passing
Another potential pitfall was the debate over how much the federal immigration crackdown hurt Minnesotans. Ultimately, rental assistance was made available throughout the state regardless of whether or not someone was impacted by Metro Surge.
How rental assistance was described was less important than getting some amount of emergency relief into the bill, DFL lawmakers said.
“More money for rental assistance is always a top priority. The loss of income that thousands of Minnesotans experienced during Metro Surge certainly exacerbated that,” said Sen. Liz Boldon, DFL-Rochester, vice-chair of the Senate’s housing committee. “However, Minnesotans were already being pushed into precarity by rising costs across the board — food, gas, tariffs, health care — and we saw a record high number of evictions in 2025, so those underlying concerns were already there.”
Other compromises to win more Republican support included adding more legislative oversight of the Minnesota Housing Finance Agency and setting aside funding specifically for affordable housing in Greater Minnesota.
That Greater Minnesota housing fund “could be a bipartisan building block for future housing investment,” said Tyler Schipper, associate professor of economics at the University of St. Thomas.
“Housing shortages are not limited to the Twin Cities and having affordable housing in Greater Minnesota can make it easier to recruit workers and promote growth in a state that has struggled to do so lately,” he said.
A win for housing, but structural issues remain
While experts and lawmakers agree that the bill will keep thousands of Minnesotans from being evicted and create as many as 2,000 new affordable housing units, it’s not enough to meet the overwhelming needs.
“I applaud any additional spending on housing and several of these programs meet unique housing needs,” Schipper said. However, “these funds are not sufficient to fundamentally change the housing calculation in Minnesota.”
Addressing affordable housing will take bigger investments and will require coordination between state, federal, and local governments, which control zoning rules.
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Anne Smetak, director and senior counsel for housing systems response at the Housing Justice Center, considered the bill “very good” given the challenges of this Legislative session. But the depth of the affordable housing crisis far exceeds the money being put towards solution.
In addition to the mismatch between the scale of the problem and the scale of funding, the Legislature sidestepped several parts of the housing equation, for now. These lingering systemic barriers and challenges, as Kaplan from the University of Minnesota’s CURA calls them, include the lack of long-term funding for affordable housing, the issue of private equity firms acquiring homes and pricing real homebuyers out of the market, and land use and zoning reform.
In other words, the legislation is both very good, and nowhere near enough.
“In many ways,” Kaplan said, “that is the story of housing investment in Minnesota.”
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