2023 Legislative Session Summary

New Homeownership Tax & Energy Code expansion stopped; Wage Liability change becomes law

In the most challenging legislative session in a generation, Housing First Minnesota led a successful industry defense against an array of issues like the creation of a new housing tax, an expansion of the residential energy code, the banning of single-familyfor-rent construction, and the raiding of the contractor recovery fund. Our professional staff, attorneys, and dedicated volunteers held back most of the opposition initiatives, shielding the industry and Minnesota’s homeowners from a host of unnecessary and expensive new rules, costs, and mandates.

The only opposition issue to advance is a new liability requirement for wage requirements downstream through the subcontractor chain. Housing First Minnesota mounted a comprehensive defense throughout session including testimony from multiple industry experts and attorneys, an array of amendments to improve the bill, and a wave of industry grassroots engagement.

In the end, the Legislature and Gov. Walz pushed forward despite broad construction industry opposition, and the bill was signed into law. It will take effect on August 1, 2023, for contracts signed after that date. Housing First Minnesota will organize education opportunities to help our institutions understand and comply with the new law.

“This was definitely a legislative session unlike any other. There were many harmful initiatives that were introduced throughout the year, but day after day your Housing First legislative team defended the industry and your homebuyers,” said Mark Foster, vice president of legislative and political affairs. “Thank you to all of the members that reached out to their legislators over the course of the session. It truly had a positive impact.”

INTRODUCING OUR NEW

INTRODUCING OUR NEW

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Carly Schwieters

612.669.8844

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Housing Tax Stopped

Despite an aggressive push from many local governments and their associations, we were successful in halting the creation of a new homeownership tax. This is a topic the industry has been engaged in for many years following the landmark ruling in Harstad v. Woodbury that ruled cities do not have the authority to charge this tax. The language had the potential to raise the cost of housing by $5,000-$10,000 per home. The House Transportation Committee heard the bill, but the Senate did not.

Residential Energy Code Expansion Halted

Through the committee process, legislators adopted language that would have created a new process of adoption for the residential energy code. This would have introduced new problematic concepts such as “mitigating the impact of climate change and reducing greenhouse gas emissions by increasing and optimizing energy efficiency and improving resiliency of new buildings.”

Housing First Minnesota expressed serious concerns throughout the committee process that the new language would significantly add to the cost of housing in Minnesota while our new housing is already significantly more energy efficient than our existing housing stock. Ultimately the problematic residential language was removed.

Wage Liability Becomes Law

Since the introduction of the language in February, Housing First Minnesota’s team at the Capitol engaged with the authors of the legislation and the activists pushing for the language. The lone proponents of the language boldly exempted themselves from the new requirements and left the rest of the industry to deal with the new law.

Both Housing First Minnesota members and lobbyists testified at every committee hearing on this bill and warned legislators of the impacts this language would have on the industry.

Additionally, legislative allies introduced numerous amendments in committees and on the House floor to try and improve the language, but they were broadly dismissed by legislative leadership.

Finally, Housing First Minnesota engaged the industry in an expansive grassroots effort in opposition. Hundreds of industry leaders contacted legislators in opposition, but the language was included as part of a larger labor bill anyway.

At the end of the day, the Legislature and Gov. Walz ignored numerous arguments that the substantial costs imposed on contractors will inevitably hurt small- to medium-sized contractors and subcontractors, increase costs, and decrease affordable housing.

NEW SINGLE-FAMILY-FORRENT BAN BLOCKED

As originally crafted, this language would have banned new single-family rental construction as well as new duplex and triplex construction unless one unit was homesteaded. Additionally, it would have left builders with fewer options when buyers cancel a purchased home already under construction. The Housing First Minnesota lobbying team expressed these concerns and more during the committee process and ultimately the bill did not advance. However, we do expect future conversations around the subject to arise.

Electric Vehicle Parking Requirement Improved

The Legislature adopted language to require the state building code to establish a minimum number of electric vehicle-ready spaces, electric vehicle-capable spaces, and electric vehicle charging stations within or adjacent to new commercial and multifamily structures. Importantly, this requirement exempts residential structures with fewer than four dwelling units.

Contractor Recovery Fund Protected

Solar contractors that implement roof panels will now be required to pay into the contractor recovery fund going forward. The original language of this bill would have allowed consumers to utilize these funds going back to 2016, despite these contractors never paying into the fund previously.

ZONING MODERNIZATION MAKES SLOW, BUT STEADY PROGRESS

For many years Housing First Minnesota has been at the forefront of the conversation around zoning modernization policy that would allow for the construction of more new starter homes. The House Housing

Committee hosted one hearing on this subject, but the Senate did not have a single hearing on the subject. During the floor debates on the housing omnibus bills, zoning amendments were introduced. While the language was ultimately voted down, both Housing Chairs indicated that there would be a deeper dive into the subject next legislative session.

SICK TIME MANDATE & PAID FAMILY LEAVE TAX COMING SOON

Over the coming years, businesses of all sizes will be required to have two new paid time off requirements. The first focuses on short-term leave for individuals or family illnesses.

Starting January 1, 2024, employers will be required to offer a minimum of one hour of sick leave earned for every 30 hours, leading to six full days of sick leave per year. Additionally, a new statewide paid family and medical leave program funded by an employer payroll tax was established. Both the payroll tax and benefits payout will begin on January 1, 2026.

Employers will be required to offer up to 20 weeks of leave per year if an employee has qualifying life events.