Minnesota Enacts $1 Billion Housing Omnibus Bill, Historic Tenants’ Rights Package, and Additional Housing and Homelessness Resources

Minnesota Governor Tim Walz signed a housing omnibus bill on May 15 that marks the state’s largest-ever investment in affordable housing. Four days later, Governor Walz signed SF 2909, which contains the most comprehensive update to Minnesota landlord and tenant law in the state’s history. In total, the state’s 2023 legislative session resulted in $2 billion dedicated to housing and homelessness resources.

“This landmark legislation is about so much more than housing,” said Anne Mavity, executive director of Minnesota Housing Partnership (MHP), an NLIHC state partner that played a key role in advocating for the legislation. Ms. Mavity is also a member of NLIHC’s board of diretcors. “It will truly transform lives and communities.”

The $1 billion housing omnibus bill (HF 2335) will amount to an 850% increase in the Minnesota Housing Finance Agency’s budget and will address the full continuum of housing needs, from homelessness prevention to first-time homeownership. The bill will raise sales taxes in the seven-county Twin Cities metropolitan area by 0.25%, which will generate $353 million in revenue over the next two years and provide a permanent revenue source for housing programs. One-quarter of the sales tax revenue will go to a state rental assistance account for housing vouchers in the Twin Cities metro area, another quarter will be directed towards housing aid for cities in the metro area, and the remaining half will fund metropolitan county-level housing assistance. The bill also invests $46 million from the state’s general fund to provide statewide rental assistance in the 80 counties outside of the metro area. Collectively, the housing bill will fund new vouchers for approximately 5,000 households each year. While this only accounts for a fraction of the nearly 136,000 cost-burdened extremely low-income renters in Minnesota, it marks progress towards alleviating housing instability and increasing access to affordable homes.

More than half the $1 billion package will expand the supply of affordable housing. The bill provides $200 million in one-time resources for a housing infrastructure program, and $90 million will be used to buy or rehabilitate older, low-rent homes that could otherwise be purchased by investors and lose their affordability. These resources will be used to take steps to mitigate the shortage of nearly 104,000 rental homes affordable and available to the lowest-income Minnesota households.

The housing package also allocates $45 million to the state’s Family Homeless Prevention and Assistance program, which provides emergency rental and utility assistance to families experiencing or at risk of homelessness. This investment builds on the $50 million enacted earlier in the legislative session, the passage of which was a top priority for housing and homelessness advocates. The earlier passage of the initial $50 million in emergency rental assistance was significant because its timing will enable resources to be allocated to community partners and disbursed to families more quickly. The housing omnibus also provides funding for new partnerships between the state housing agency and the Department of Human Services to connect people receiving housing assistance with other supportive services.

Finally, the housing omnibus contains $150 million in downpayment assistance for first-time homebuyers, which will enable approximately 5,000 Minnesotans to purchase homes. This funding aims to target the state’s racial homeownership gap: just 30.5% of Black Minnesotans own their homes, compared to 77.5% of white Minnesotans.

The omnibus’s $1 billion in direct appropriations for housing makes up just half of the total investments Minnesota will make in housing and homelessness this session. Through two capital investment (bonding) bills, Minnesota will invest an additional $76 million to preserve and maintain public housing throughout the state. The tax omnibus bill includes targeted taxes and refunds to homeowners, owners of multifamily affordable housing, and renters. The tax bill also includes funding to produce more single-family homes and create a new local and county housing aid program. Over $220 million will go to preventing and ending homelessness.

Years of advocacy laid the groundwork for the passage of the housing omnibus. Renters, housing and legal advocacy organizations, housing providers, CAP agencies, and housing authorities participated in a diverse coalition that built support for the bill. The 2023 legislative session presented an opportune political moment for the housing package: while the Minnesota legislature has been divided in recent years, the Democratic-Farmer-Labor Party (the state affiliate of the Democratic party) gained unified control of both chambers and the governorship in the past election cycle. This political dynamic, as well as the state’s $17.5 billion budget surplus, brought new momentum to the push for long-overdue housing investments.

The state legislature also approved substantial updates to Minnesota landlord-tenant law, which will strengthen tenant protections. The governor signed the package into law on May 19. Most of the new provisions will take effect on January 1, 2024.

The bill makes a series of reforms related to eviction filings and records. Landlords will be required to provide 14 days’ written notice before filing an eviction for nonpayment of rent, and cities will be permitted to enact and enforce stronger pre-filing notice requirements. The bill also makes eviction expungements more accessible in certain cases: when the tenant prevails, when the case is dismissed, when the parties agree to expungement, when the tenant requests expungement upon settlement of the case, or when the eviction was ordered at least three years ago. The expungement reform provisions prohibit evictions from being reported in public court records until the court decides in favor of the landlord. The bill also establishes the right to counsel in eviction court for public housing tenants facing breach-of-lease eviction cases.

In addition, the package contains provisions related to landlord transparency and accountability. Landlords must disclose mandatory fees alongside the rent on the first page of the lease, as well as in any advertisements or postings of an available unit. The bill allows tenants to request move-in and move-out inspections, which will promote fairness in the landlord’s decision to withhold the tenant’s security deposit. The bill prevents landlords from requiring a tenant to renew their lease earlier than six months before the current lease expiration date, for leases of longer than 10 months.

The package also includes certain provisions related to tenant health and safety. Tenants will be allowed to break their leases within a two-month period when medically necessary. The bill sets the statewide heat code minimum at 68 degrees from October 1 to April 30 in units where the tenant does not control their heat. The bill expands the category of emergency repairs for which court proceedings are expedited to include refrigeration, air conditioning, serious infestations, non-working elevators, and other conditions that threaten health and safety. To make remedies more accessible to tenants with urgent needs, the bill decreases filing fees for emergency tenant remedies and lockout petitions to equal small claims court filing fees. The bill also strengthens tenants’ privacy rights by requiring a 24-hour notice for a landlord to enter a tenant’s home, unless the tenant and landlord agree otherwise. The landlord must specify an anticipated time window of entry and may only enter between 8 am and 8 pm, unless the landlord and tenant agree on a different time window.

Finally, the bill limits crime-free lease provisions, which prevents landlords from penalizing tenants or terminating leases for conduct related to their premises unless it would constitute a crime of violence. The bill also prevents landlords from requiring pet declawing and devocalization or advertising property in a way that discourages applications from prospective tenants whose pets are not declawed or devocalized.

As Minnesota advocates celebrate a pair of historic victories for housing affordability and tenant protections, they are also preparing for the ongoing work ahead. Although coalition members advocated to enact a ban on source-of-income discrimination in the 2023 legislative session, this provision did not secure enough support to pass both chambers of the legislature. Minnesota advocates will continue to push for source-of-income legislation and additional tenant protections in the 2024 legislative session and beyond.