Housing First Minnesota Advocacy Update - Q1 2018

LETTER FROM THE DIRECTOR OF ADVOCACY JAMES VAGLE :: DIRECTOR OF ADVOCACY BATC-HOUSING FIRST MINNESOTA

Q1

ADVOCACY UPDATE

Housing Takes Center Stage Dear Members,

existence of an affordability problem. This basic

We didn’t have to wait long to see tangible evidence of the growing awareness of the housing affordability challenges facing our industry and our state. Individual legislators

identification of the affordability challenge is a major milestone, but the hard work of addressing the cost drivers in housing – land, labor, material and regulatory costs – is really just beginning.

have initiated discussions, authored legislation

BATC-Housing First Minnesota, with the support

and have extended multiple invitations for

of its membership, has driven this discussion

BATC-Housing First Minnesota to share the

and will continue to provide industry perspective

industry perspective in affordability discussions.

and solutions to address the challenges facing

Gov. Dayton has joined the discussion as well,

our industry. From addressing our workforce

creating a Task Force on Housing Affordability.

shortage, to local zoning challenges, to the

What does this all mean? It means the core issues impacting our industry have elevated to a new level. Where the occasional mention of

regulatory costs and beyond – BATC-Housing First Minnesota will continue to be our industry’s leading voice.

housing affordability occurred over the last two

I hope you enjoy our update from Q1,

decades, today there is little debate about the

we look forward to a successful 2018!

JAMES VAGLE :: DIRECTOR OF ADVOCACY BATC-HOUSING FIRST MINNESOTA

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LEGISLATIVE ADVOCACY BATC-Housing First Minnesota seeks to share the impact of current and proposed legislation with elected officials at the federal, state and local levels. We work to influence the process to ensure that our builders and remodelers can continue to build safe, durable homes at a price families can afford. Through data, testimony, one-on-one conversations, position statements and by providing background materials, BATCHousing First Minnesota strives to have elected officials support legislation that promotes housing and homeownership.

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LEGISLATIVE ADVOCACY

2018 Legislative Session: Housing Industry Priorities Advancing Following a successful 2017 legislative session, BATC-Housing First Minnesota once again teamed up with the Minnesota Association of REALTORS® to create a handful of proposals aimed at addressing the workforce crisis, regulatory burden and affordability for first-time buyers.

Since the beginning days of the legislative session, the reception from the public and legislators has been very supportive.

Construction Workers Wanted It is clear that the labor shortage is among the biggest obstacles facing our industry and that this is a long-term problem. BATC-Housing First Minnesota has joined with The Builders Group, Minnesota Builders Exchange, Associated Builders and Contractors and several other organizations to create Project Build Minnesota. The goal of Project Build Minnesota is to remind folks that mastering a trade, for those that enjoy working with their hands and building things, is a smart choice.

With the help of significant donations and contributions from industry members, Project Build

Minnesota plans to move ahead in 2018 with its first round of marketing. The industry-wide campaign will work to educate Minnesota’s young adults, their parents, teachers and counselors about the career paths available in construction and that it is a noble, exciting way to build communities and shape people’s lives.

BATC-Housing First Minnesota and ABC have worked closely with legislative leaders, Rep. Regina Barr (Inver Grove Heights) and Sen. Rich Draheim (Madison Lake), to ask for financial support for Project Build Minnesota.

It is clear that the labor shortage is among the biggest obstacles facing our industry and that this is a long-term problem.

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POST JOBS FOR FREE JOIN THE SPEAKERS BUREAU MAKE A CONTRIBUTION GET INVOLVED

projectbuildmn.org

LEGISLATIVE ADVOCACY

Reducing the Regulatory Burden for Minnesota Families SF 2567, a bill that would reduce the regulatory burden for Minnesota families, was heard in the Senate State Government Finance and Policy and Elections Committee on March 2. BATC-Housing First Minnesota President Tom Wiener (Cardinal Companies), regulatory affairs manager, Nick Erickson, and legal counsel Peter Coyle testified in support of the bill.

“The various regulations relating to stormwater rules, building code, energy code and all of the land use requirements add up to make building an affordable home extremely difficult, and sometimes impossible,” Wiener said.

The legislation would provide a mechanism to review proposed regulatory rules that have a cost impact of $1,000 or more.

This would allow a committee of either the House of Representatives or the Senate to do a cost benefit analysis on rule changes.

“The primary driver of the high cost of housing in our state is the multitude of local, regional and state regulations,” said Erickson.

BATC-Housing First Minnesota President Tom Wiener (Cardinal Companies) testified in support of bill SF 2567.

“City fees, Met Council land policy and rulemaking processes for the wetland conversation act, construction stormwater permit, building code, energy code, plumbing code and electrical code are all examples of rules processes that impact housing. And while we have confidence in the technical expertise in each of the agencies and rulemaking processes, we simply aren’t seeing an emphasis on the broader affordability impacts that these accumulating rules create.”

“As a builder for several decades, I can tell you that the recent acceleration of regulatory rules and requirements has had a major impact on our industry and ultimately on my ability to build affordable homes.”

SF 2567 has been laid over for inclusion in an omnibus bill and is expected to be heard in the House of Representatives in the near future.

Tom Wiener, 2018 BATC-Housing First Minnesota President

The legislation would provide a mechanism to review proposed regulatory rules that have a cost impact of $1,000 or more. This would allow a committee of either the House of Representatives or the Senate to do a cost benefit analysis on rule changes.

No More Sprinklers During the 2017 Legislative Session, the sprinkler mandate for twin homes was conformed with the BATC v. DLI courtcase. The impact of this legislation was positive and immediate.

“The sprinkler mandate added between three to eight percent to the price of twin homes,” said Nick Erickson, regulatory affairs manager. “These added costs came at a time when other regulatory changes from the state added roughly an additional $15$20,000 in construction costs.”

In February, Erickson testified in the House Job Growth and Energy Affordability Policy and Finance Committee as he shared the positive impacts.

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LEGISLATIVE ADVOCACY

BATC-Housing First Minnesota’s David Siegel presents to the Senate Agriculture, Rural Development and Housing Policy Committees.

Presenting the State of Housing to the Senate BATC-Housing First Minnesota executive director David Siegel had the opportunity in March to share the “State of Housing: The Homebuilding & Remodeling Perspective” presentation with the Senate Agriculture, Rural Development and Housing Policy Committee.

“There’s good news as Minnesota’s housing industry continues to climb out of the housing crash,” said Siegel.

“However, housing affordability and workforce challenges present a real threat to our housing market and economy.

Addressing the challenges of the housing industry must be an all-hands, bipartisan effort.”

During the 30-minute discussion with the committee, Siegel presented data on single-family permits and discussed the price point distribution from 2006

compared to 2016 data.

“Less than 40 percent of the new homes in the Twin Cities region are built under $325,000. Compare that to nearly 90 percent in St. Louis, 70 percent in Indianapolis and Nashville, and over 60 percent in Kansas City. Minnesota is lagging greatly behind its Midwest peers.”

Siegel went on to discuss the regulatory burdens that are seen in Minnesota and how thay are having an impact on the ability to build a more affordable product.

In addition, the construction industry workforce crisis was discussed and Siegel encouraged the committee to support Project Build Minnesota to help address this problem.

Bills affiliated with Project Build were recently introduced.

Less than 40% of the new homes in the Twin Cities region are built under $325,000. Compare that to nearly 90% in St. Louis, 70% in Indianapolis and Nashville, and over 60% in Kansas City. Minnesota is lagging greatly behind its Midwest peers.

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Advocating for Homeownership as Minnesota Addresses Tax Conformity BATC-Housing First Minnesota has been engaged in the federal tax conformity discussion that is occurring at the state Capitol in response to the Federal Tax Cuts & Jobs Act (TCJA) enacted in December. TCJA made numerous changes to the federal tax code, including provisions affecting current and prospective homeowners.

As the legislature considers changes to Minnesota’s tax code, we will be there representing the interests of our members, including being strong advocates for homeowners and homeownership.

SOME OF THE MAJOR PROVISIONS IN THE FEDERAL TCJA THAT IMPACT HOMEOWNERS: Generally lower taxes

Repeal of personal exemptions

Increased standard deduction to $12,000 for individuals, $24,000 for joint filers Mortgage Interest Deduction (MID) limit reduced to $750,000 (for new loans taken out after 12/14/17)

Capped the itemized deduction for state and local taxes (SALT) at $10,000

Deduction for home equity debt interest was repealed. Interest still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence

LEGISLATIVE ADVOCACY

Speaker of the House Kurt Daudt meets with BATC-Housing First Minnesota and MN REALTOR® members.

Housing Day at the Capitol Hundreds of housing industry leaders attended the 2nd Annual Housing Day at the Capitol on March 14. With members from BATC-Housing First Minnesota and the Minnesota REALTORS® talking with their legislators, more than 85 percent of the legislature had a conversation with our industry. Talk about powerful!

See additional photos on page 64.

Rep. Roz Peterson elaborates on her experience as a part of the housing industry.

Attendees gather before their meetings at the Capitol for lunch and a few advocacy tips.

Sen. Melisa Frazer reviews a booklet of housing industry issues.

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Shawn Nelson, New Spaces, discusses housing industry issues Rep. Andrew Carlson.

Sen. Karin Housley talks housing with her constituents.

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REGULATORY ADVOCACY BATC-Housing First Minnesota strives to illustrate the cumulative effect of multiple regulatory impacts on home building and remodeling. This involves working with government agencies to ensure that regulations applied to our industry are common sense, necessary and based on sound science.

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REGULATORY ADVOCACY

Building Code Technical Advisory Groups The Minnesota Department of Labor and Industry (DLI) is engaged in review of a wide range of codes affecting new construction. To assist the department, it formed several Technical Advisory Groups (TAGs) to provide insight. Since mid-January, TAGs have been hard at work reviewing the proposed changes to Minnesota’s building codes.

Representatives of BATC-Housing First Minnesota were appointed to the Code Administration, Energy Code, Residential Building Code and Structural Code TAGs and have been providing input on the various code changes from the perspective of home builders and homebuyers.

The TAGs completed their work in mid-March. Recommendations for each code topic will be presented to the Minnesota Construction Code Advisory Council later this year. DLI Commissioner Ken Peterson will consult the recommendations of the TAGs and Council before presenting Minnesota’s draft building codes.

Housing First Minnesota TAG Appointees Residential Building Code:

Brent Nygaard Lennar

Administration:

Mike Swanson

DLI expects the new building codes to take effect in March 2020.

Bill Gschwind, regulatory affairs committee chair, led the committee discussion in February.

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Structural Code:

Mike Barden Pulte Group

Energy Code:

Ross Anderson The Energy Network

REGULATORY ADVOCACY

Governor’s Housing Affordability Task Force

Participation on the task

Last December, Gov. Mark Dayton formed a task force to examine the high cost of housing in Minnesota. BATC-Housing First Minnesota has attended meetings of the task force as well as its Homeownership Work Group, including testifying at multiple workgroup meetings. Participation in the task force has allowed BATC-Housing First Minnesota to frame the discussion around increased housing affordability for all Minnesotans and demonstrate the strength of its advocacy program.

In March, BATC-Housing First Minnesota responded to the task force’s call for proposals by submitting solutions to address the problems of surging regulatory cost and the industry-wide labor crisis. The proposal called for funding of Project Build Minnesota by the legislature (HF3810/SF3430), the passing of BATCHousing First Minnesota’s regulatory reform bill (HF3044/SF2576) and for local governments to wave local regulations for publicly funded housing projects.

force has allowed BATCHousing First Minnesota to frame the discussion around increased housing affordability for all Minnesotans and demonstrate the strength of its advocacy program.

Water Quality Report Released For the past year, a workgroup made of state agencies and interested parties has been examining how various state agencies should approach water refuse rulemaking. The Minnesota Department of Health issued the report resulting from this effort in early March.

While not a binding rule, this draft report outlines standards from which future water reuse rules will be based, including stormwater reuse for irrigation and water reuse within a home. The report also included a breakdown of which state agency has authority over a specific water reuse rule, water quality standards and additional criteria for water reuse.

In October, BATC-Housing First Minnesota asked the interagency workgroup to take a step back from the draft report, noting concerns over the process and questions about the research used to develop the final report. In addition to the comments submitted on behalf of the industry, Nick Erickson, regulatory affairs manager, participated in several work groups discussing the report.

LOOKING

AHEAD TO

Q2

• Building Code • Draft 2018 • Lead Paint / TAG Reports Construction RRP (Minnesota Released Stormwater Department (Minnesota Permit of Health) Department of Labor & Industry)

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(Minnesota Pollution Control Agency)

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LEGAL ADVOCACY When an unfavorable or abusive law or rule must be challenged in court, BATC-Housing First Minnesota steps up via our Housing Affordability Institute. Legal advocacy is the last line of defense for the industry.

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LEGAL ADVOCACY

Housing First Minnesota Files Brief in Support of Harstad in Suit Against Woodbury’s Fees

Housing Affordability Institute

In February, BATC-Housing First Minnesota submitted a friend-of-the-court brief in support of Twin Cities developer Martin Harstad’s suit against Woodbury’s traffic fees. Harstad sued the City of Woodbury in 2015, contending the city’s Major Roadway Assessment fees, which are used to pay for anticipated but not confirmed traffic-related improvements throughout the city, were not permitted under state law.

In September, the Court of Appeals upheld a lower court’s ruling that these fees are unlawful.

BATC-Housing First Minnesota staff and the steering committee of the Housing Affordability Institute, formerly known as the Legal Defense Fund Committee, have been working to establish the new entity. Watch for more news in Q2.

The Minnesota Supreme Court granted Woodbury’s petition for review in November. Rochester-area developer and BATC-Housing First Minnesota member Frank Kottschade and the National Association of Home Builders joined BATC-Housing First Minnesota in submitting the amicus brief.

The Minnesota Supreme Court has not yet set a date for the hearing.

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ISSUE & LOCAL ADVOCACY The advent of social media, technology and the internet have substantially elevated the opportunities for issue advocacy.

Issue advocacy refers to social media, digital and traditional advertising on broad political issues. The goal is to engage and persuade the public to support our advocacy agenda. Additional outreach and events with elected officials and the public help to share the good work of the housing industry.

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LOCAL ADVOCACY

MnDOT and City Zoning The Minnesota Department of Transportation (MnDOT) Aviation Unit has spent the last several years working on legislation to reaffirm its role in zoning in communities across the state. The State of Minnesota requires cities with or near airports to account for the airport traffic when zoning. Zoning in these communities must meet the standards set by MnDOT. MnDOT‘s aviation unit and BATC-Housing First Minnesota’s advocacy team met to discuss the legislation and the overall role the department plays in zoning in communities across Minnesota.

Discussing Housing Affordability with Local Governments The BATC-Housing First Minnesota team met with representatives of the League of Minnesota Cities and the Association of Metropolitan Municipalities (Metro Cities) over the past few months to discuss the effect local fees and regulations have on housing affordability in Minnesota.

January meeting of the local goverment issues working group.

Text to Take Action When our industry is faced with challenges, it’s important elected officials hear directly from their constituents in the industry. Please text HOUSINGFIRST to 52866 to get regular updates and be ready to take action.

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TEXT HOUSINGFIRST TO 52866

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ELECTORAL ADVOCACY Electoral Advocacy is critical to the success of our comprehensive advocacy program. It is essential to participate in the electoral process to help elect housing-friendly individuals to public office.

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ELECTORAL & ISSUE ADVOCACY

Housing and the 2018 Election Conversation

Woodbury Mayor Mary Giuliani Stephens met with the BATC-Housing First Minnesota leadership to discuss housing issues and her 2018 gubernatorial campaign.

In less than eight months, Minnesota will elect a new governor. Current Woodbury Mayor Mary Giuliani Stephens (R), who is running to replace Gov. Dayton, met with BATC-Housing First Minnesota leadership in January to discuss a variety of housing issues and her campaign to be Minnesota’s next governor.

Among the many topics discussed were Minnesota’s regulatory environment, the construction workforce shortage and the role of the Metropolitan Council.

BATC-Housing First Minnesota has invited all major gubernatorial candidates to meet with the task group of housing industry leaders and will continue to elevate housing as a priority during the 2018 elections.

“We know that regardless of who is elected, we need to be able to communicate the key issues that are facing the housing/construction industry.

We believe that discussions like these are extraordinarily valuable as we look toward the future of Minnesota’s housing industry.”

Daryl Doehr, 2017-18 Housing First Chair

Growing the Housing Movement In conjunction with the Minnesota REALTORS®, BATC-Housing First Minnesota has launched an influencer campaign in an effort to raise public awareness of the housing movement. Tied to a message of housing affordability for Minnesota and homeownership that families can afford, this campaign is touching all corners of the state. You may have heard our ads on Minnesota Public Radio, seen our digital ads on your phone, or driven by one of the billboards.

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