Housing First Minnesota Advocacy Update - Q4 2017

Q4

ADVOCACY UPDATE

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

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What a Great Year for our Industry!

The housing movement is advancing and we closed the fourth quarter of the year by continuing our dialogue on housing issues with the deep pool of gubernatorial candidates who are vying for election in 2018. These conversations are extremely valuable in helping elevate the core issues of housing affordability, homeownership and growing our workforce. We are pleased to see more housing chatter from candidates on the campaign trail than ever before.

Looking ahead to 2018 we know that the November elections will dominate the advocacy landscape, and we will be present throughout to ensure that housing is part of the conversation. There will be other major tasks in front of the housing industry as well, including the Supreme Court hearing of Harstad v. Woodbury, the technical update to the building and energy codes, and a strong push for workforce development in support of Project Build Minnesota.

We’ve also been busy building out the Housing First Advocate Network, which captures the depth of our industry by organizing everyone in a single network.

Our successes in 2017 would not have been possible without the dedicated and talented members of the housing industry.

To all who contributed time, talent, and

This will allow us to communicate major industry news and action alerts via text or email, and we also are increasing our capacity to connect industry members with their local elected officials at unique events.

treasure to the housing movment, THANK YOU!

JAMES@HOUSINGFIRSTMN.ORG

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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: What Lies Ahead?

BATC-Housing First Minnesota and the Minnesota Association of REALTORSÂŽ will once again have a handful of proposals that will make up the Minnesota Homeownership Initiative.

These solutions will address many of the obstacles currently facing the housing industry: labor, regulatory burden and affordability for first-time buyers.

The Minnesota Legislature will gavel in the 2018 Legislative Session on Feb. 20.

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First-Time Homebuyer Savings Account Last session, the legislature took a positive step forward in encouraging Minnesotans to save more of their own money for purchasing their first home through the establishment of First-Time Homebuyer Savings Accounts.

However, work remains.

As current law allows, first-time homebuyers and those re-entering the housing market can establish

savings accounts to be used toward the purchase of a house and/or closing costs. Married joint filers can contribute up to $28,000 and individuals up to $14,000 each year in a standard savings account. Interest and dividend gains can be claimed as a state tax deduction.

In order to incentivize more Minnesotans to save for their dream home, the Minnesota Homeownership Initiative will propose expanding the state tax deduction beyond the interest earned.

LEGISLATIVE ADVOCACY

Labor, Labor, Labor Industry members far and wide have been talking about labor and workforce challenges. It is clear that this is among the biggest obstacles facing our industry and it will be facing us for some time. 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. This new organization will provide a platform to shift the conversation about jobs in the construction industry.

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 primary goal is to drive

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traffic to the website and get 16- to 22-year-olds interested in construction careers. Project Build Minnesota will use social media, blogs and other digital ads.

While they are excited to get started with the marketing campaign, additional funding is needed. When the 2018 legislative session starts this February, the organization will share its mission with legislators and seek state assistance to further strengthen Project Build Minnesota. They hope to share with lawmakers the importance of solving the labor shortage as it’s vital that we build new homes in this state not only for our economy, but to ensure that the American dream of homeownership is achievable for all Minnesotans.

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PROJECTBUILDMN.COM

LEGISLATIVE ADVOCACY

Addressing Regulatory Burden The regulatory costs associated with new construction have surged over the past decade. We know that we need regulations to ensure safety and durability in new home construction, but the regulatory structure must meet these objectives at a price that families can afford.

The cost of complying with local and state government regulations negatively affects the affordability of housing. Every mandate, fee, and project delay represents a real cost that is passed on to homebuyers.

Some of the challenges faced by homebuyers include: Homebuyer Access

Regulatory Costs Have Soared

Affordability Gets Lost in Regulatory Process

In Minnesota, for every $1,000 increase in the price of a home, about 4,000 households are priced out of the market for a median-priced new home.

National estimates show that, on average, regulations imposed by government at all levels account for nearly 25 percent of the final price point of a home.

Well-intentioned policy work in the various state agencies aims to meet regulatory goals, but too often it misses the equally important goal of minimizing cost impacts for homeowners.

Homeownership is less Attainable for too Many The homeownership rate is at decades-low levels both in Minnesota and nationally. Greater affordability in all homes means more homeownership for all.

During the 2017 legislative session, Rep. Bob Vogel and Sen. Mary Kiffmeyer proposed a bill that would allow for the legislative committee with jurisdiction to review rulemaking proposals which would impact individual homeowner costs to purchase or remodel a home by $1,000 or more. Similar bills are expected to move forward this session.

Federal Tax Reform: Protecting Homeownership Incentives BATC-Housing First Minnesota sent a letter to Minnesota’s congressional delegation asking that popular homeownership incentives be protected as Congress takes up tax reform.

The letter, sent to the state’s eight members of the House of Representatives and both United States Senators, outlines the importance of mortgage interest deductions and property tax deductions and why these provisions should be retained.

The letter echoes BATC-Housing First Minnesota’s long-held belief that tax provisions encouraging homeownership should be protected in any upcoming tax reform legislation.

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For every $1,000 increase in the price of a home, 4,000 households are priced out of the market

Government regulations account for nearly 25% of the cost of a new home

“Our tax code has historically incentivized homeownership altering the popular homeownership-related tax deductions threatens homeownership rates and harm an industry that is finally recovering from the economic crisis faced over the last decade, negatively impacting our economy.”

Bob Michels,

David Siegel,

2017 BATC-Housing First

BATC-Housing First Minnesota

Minnesota President

Executive Director

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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 Legal Defense Fund. Legal advocacy is the last line of defense for the industry.

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LEGAL ADVOCACY

Harstad v. Woodbury: Landmark Victory Against Impact Fees In a landmark win for the industry, the Minnesota Court of Appeals upheld a lower court’s ruling that cities cannot withhold approval of a development to force a developer to consent to impact fees. In 2016, developer Martin Harstad sued the city of Woodbury over its major roadway assessment fees, which the district court found illegal. BATCHousing First Minnesota, along with NAHB and Frank Kottschade, filed a friend-of-the-court brief supporting Harstad’s Court of Appeals case.

The Minnesota Supreme Court announced in November that it will review the case. BATCHousing First Minnesota, along with Kottschade, will be submitting a friend-of-the-court brief to the Minnesota Supreme Court on behalf of Harstad.

BATC-Housing First Minnesota Legal Defense Fund Roster Jason McCarty (Chair)

Westwood Professional Services

John Anue Lennar

Pam Belz

Presbyterian Homes

Ed Englebrecht Pella Windows

Frank Kottschade North American Realty

Nick Erickson

BATC-Housing First Minnesota Staff

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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

Lead Paint/RRP Rule: Industry Pushes Reform The Minnesota Department of Health released an updated draft of its Renovate, Repair, and Paint (RRP) Rules in late September in response to the housing industry’s collective unease with previous drafts released

by MDH. The state’s proposed RRP Rules governing remodeling and renovation practices in pre-1978 homes will replace the Environmental Protection Agency’s RRP Rule in Minnesota once adopted.

BATC-Housing First Minnesota and other industry groups have been concerned that remodeling costs of pre-1978 homes would soar under Minnesota’s proposed RRP Rules, due

to costly requirements that exceed the current EPA rule.

The September draft, which followed two alternative drafts submitted by BATC-Housing First Minnesota and a meeting with representatives of the housing industry in late August, included 32 changes from the draft RRP Rules released in July.

Following the release of the September draft, BATC-Housing First Minnesota submitted a list of 23 changes recommended by industry experts in mid-October. MDH responded in November, agreeing to make 15 changes directly related to BATC-Housing First Minnesota’s proposal.

RRP Timeline JULY 12

Draft 2 Released JULY 19

EPA Meeting JULY 21

Nari-MN REALTOR Meeting JULY 25

Draft 2 Comments Issued AUG 12

Hosted Industry Meeting

AUG 28

MDH Stakeholder Meeting SEPT 27

Draft 3 Released OCT 18

Hosted Industry Meeting OCT 19

List of 25 Improvements Sent NOV 9

MDH Accepts Changes

AUG 24

Two Alternatives Submitted, MDH Meeting

Building Code Process Members of the state’s Construction Code Advisory Council met on Nov. 30 to begin the process of updating the state’s building codes.

During the meeting, the Construction Codes Advisory Council appointed the official members of its 10 Technical Advisory Groups (TAGs), the bodies responsible for reviewing changes to each code: Accessibility Code, Building Code Administration, Commercial Building Code, Elevator Code, Energy Code, Existing Building Code, Fire Code Compatibility, Mechanical and Fuel Gas Code, Structural and the Residential Building Code.

In the coming weeks, the TAGs will begin reviewing the changes in the 2015 and 2018 codes and prepare recommendations of which code provision to adopt.

The Construction Code Advisory Council will then review the TAGs recommendations and submit its findings to the Department of Labor and Industry Commissioner, before the final proposed code is published.

The final draft codes will be opened for public comment before going into effect, with a draft available in mid-2018. The new codes will take effect in March 2020.

Four BATC-Housing First Minnesota members were appointed to TAGs at the meeting: Residential Building Code:

Brent Nygaard Lennar

Administration:

Mike Swanson JMS Custom Homes

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Mike Barden Pulte Group

Energy Code:

Ross Anderson The Energy Network

In addition to their TAG appointments, Swanson and Anderson also serve on BATC-Housing First Minnesota’s Regulatory Affairs Subcommittee.

In the coming weeks, the TAGs will begin reviewing the changes in the 2015 and 2018 codes and prepare recommendations of which code provisions to adopt.

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Structural Code:

REGULATORY ADVOCACY

WOTUS Rule Repeal BATC-Housing First Minnesota submitted comments in October to the EPA and the Army Corps of Engineers regarding the Waters of the United States (WOTUS) Rule. In its letter, BATC-Housing First Minnesota applauded the move to better define which water bodies fall under this rule and to recodify the previous WOTUS rule.

Stay up to date on the latest regulatory & code updates: HousingFirstMN.org

Water Quality Rulemaking A Minnesota interagency workgroup has been examining how various state agencies should approach water refuse rulemaking. While not a binding rule, this draft report will outline a process and standards off which future water reuse rules will be based.

The final report will provide guidance on housing-related water reuse including stormwater reused for irrigation and water reuse within a home. Nick Erickson, regulatory affairs manager, submitted comments on behalf of BATCHousing First Minnesota.

Join the Housing First Advocate Network Are you willing to contact your elected officials on behalf of the housing industry? Join the Housing First Advocate Network (HFAN). When our industry is faced with challenges, it’s important elected officials hear directly from their constituents in the industry. The Housing First Advocate Network is a grassroots network utilized to advocate for the industry at all levels of government.

TEXT HOUSINGFIRST TO 52866

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ISSUE ADVOCACY & OUTREACH 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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ISSUE ADVOCACY & OUTREACH

Local Advocacy Fighting for Affordability: Stopping Local Design Standards In 2017, the Dayton Planning Commission proposed costly and restrictive design requirements for new home construction in the city. The standards which exceed the city’s authority would have resulted in increased construction costs and delays. In May, the Planning Commission and city staff hosted a roundtable with BATC-Housing First Minnesota members and staff regarding the proposed standards.

Local Government Issues Working Group Holds Inaugural Meeting The inaugural meeting of BATC-Housing First Minnesota’s Local Government Issues Working Group (LGIWG) was held in November. Over the past two years, BATC-Housing First Minnesota has added professional advocacy staff who are expanding our work in the regulatory, grassroots, political and local government space. The LGIWG emerged from this emphasis and provides a structure to review, prioritize and manage local engagement opportunities.

At its November meeting, the Dayton City Council and Planning Commission met in a joint session to discuss a revised version of the proposed design standards. Housing First Minnesota submitted a letter outlining how the proposed design standards would reduce home affordability in the city.

Home Builders Honor Twin Cities’ Best BATC-Housing First Minnesota is honored to name Representative Dennis Smith (Maple Grove) and Senator Dan Hall (Burnsville) as the recipients of its Legislator of the Year Awards. Housing First Minnesota’s Legislator of the Year Awards are given to members of the Minnesota Legislature who have championed housing issues and industry legislative priorities.

“During the 2017 legislative session, Representative Smith and Senator Hall both played key roles in helping advance homeownership and housing affordability for all Minnesota families,” said Bob Michels, 2017 BATC-Housing First Minnesota President. “Our Legislator of the Year Awards recognize both Rep. Smith and Sen. Hall as housing champions who understand that homes are the backbone of strong communities.”

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Representative Smith championed legislation that removed barriers to condo and townhome development.

Senator Hall championed legislation that created a fair notice for housing moratorium.

“We thank Senator Hall and Representative Smith for their work at the Capitol,” said David Siegel, executive director of BATC-Housing First Minnesota. “We are already seeing positive outcomes in the housing market from the passing of these pieces of legislation.”

The awards were presented during BATC-Housing First Minnesota’s annual Building Industry Gala (BIG Night) on Oct. 26.

SEE ALL BIG NIGHT AWARD WINNERS ON PAGES 44-50

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2017 Legislators of the Year, Rep. Dennis Smith (Maple Grove), Sen. Dan Hall (Burnsville)

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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 get individuals who are friendly to our cause elected to public office. BATC-Housing First Minnesota uses its Housing First Fund and Housing First PAC to engage in the electoral process at the state and local levels.

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ELECTORAL ADVOCACY

Housing Becomes Part of 2018 Election Discussion In less than 11 months Minnesotans will go to the polls to determine who will become their next governor. Health care, education and the economy are sure to dominate the conversation throughout the primary season and run-up to the general election, but housing has also been elevated as part of frequent discussions amongst the 2018 contenders.

The housing industry makes up approximately 15 percent of Minnesota’s GDP. From providing good-paying jobs for construction workers to building the American dream, the housing industry is an integral part of Minnesota’s economy.

Sen. David Osmek (Mound)

That’s why BATC-Housing First Minnesota has had conversations with many of the leading gubernatorial candidates in the past months.

“We know that regardless of who is elected, we need to be able to communicate the key issues that are facing the housing and construction industry. Since July, we have had quality conversations with candidates from both major parties,” said Daryl Doehr, senior regional sales manager of Marvin Windows and 2017-18 Housing First Chair.

Rep. Erin Murphy (St. Paul)

The housing industry makes up approximately 15 percent of Minnesota’s GDP. From providing good-paying jobs for construction workers to building the American dream, the housing industry is an integral part of Minnesota’s economy.

Former Rep. Keith Downey (Edina) @HOUSINGFIRSTMN

Housing Advocate Elected to Bloomington City Council Shawn Nelson, housing industry advocate and former BATC-Housing First Minnesota president, won a special election for Bloomington City Council on Nov. 7.

With his victory over incumbent Eldon Spencer, Nelson will represent the 2nd district in Bloomington. He took the oath of office on Nov. 20 and his term runs until January 2020.

Nelson owns and operates his remodeling business, New Spaces, in Bloomington.

He is also a long-time Bloomington resident, husband to Ann, and father of two daughters.

Nelson was also endorsed by the Housing First PAC in October.

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HOUSING FIRST MINNESOTA

Follow Housing First Minnesota on social media to continue the conversations

“We congratulate Shawn on his victory. For years he has demonstrated his support for a strong housing market, which ties together the communities of our great state. He is a proven leader in the Bloomington community who shares our goal of building safe, smart and durable homes, at a price that families can afford.”

Bob Michels, 2017 BATC-Housing First Minnesota President

HOT SHEET

Love Industry News & Data?

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SHEET

MSP

MN

3.4%

3.3% October 16

Unemployment Rate Snapshot

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October 16

Minnesota’s unemployment rate fell to a seasonally adjusted 3.3 percent in October, the best monthly performance for the state in 17 years.

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2.3% 2.4%

July 17

Employment

October 17

June 17

October 17

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HOT

S PONS ORED BY

Twin Cities Construction Employment

SOURCE: DEED-MN

SOURCE: DEED-MN

6.1% Y-Y Change

$244,000

$230,000

“

Oct. 16

Builders would like nothing more than to construct more affordable homes, but there are several factors pushing against market-based affordable housing including regulations and the increasing labor shortage.”

Oct. 17

Twin Cities Construction Weekly Wage

Twin Cities Median Home Price

SOURCE: DEED-MN

SOURCE: MPLS REALTORS

-18%

0.30%

Y-Y Change

Y-Y Change

Oct. 16

Oct. 16

Oct. 17

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Twin Cities Inventory of Homes for Sale

David Siegel BATC-Housing First Minnesota Executive Director

Twin Cities Total Closed Sales SOURCE: US CENSUS

SOURCE: US CENSUS

Units YTD: 10,529

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40% Y-Y Change

Metro Building Permited Units Past 12 Months SOURCE: KEYSTONE REPORT

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Multi-Family 53% of Twin Cities Housing Units Authorized

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Twin Cities Housing Units Authorized SOURCE: KEYSTONE REPORT