Minneapolis’ 4 housing moves can be blueprint for fixing Chicago

Chicago’s tight rental market is raising rents and eating larger chunks of residents’ income. But the city can fix that by following Minneapolis’ lead.

Rent should only take about 30% of your income, but in Chicago nearly half of renters are estimated to be above that benchmark.

That’s according to a study by the Joint Center of Housing at Harvard University, which estimated 48.2% of renters in the Chicago area were paying more than 30% of their income for housing as of 2021. The high rents are driving a housing crisis.

But Minneapolis has significantly improved its housing problems during the past decade. Ideas to expand affordable housing in its Minneapolis 2040 plan have already improved housing affordability. Minneapolis’ moves included:

1. Eliminating its minimum parking requirement for all new developments. A study found every new parking space below grade adds $50,000 in per-unit development costs. In response, Minneapolis has slowly done away with parking requirements by first eliminating parking minimums in downtown districts in 2009, reducing minimums in transit areas in 2015 and finally eliminating all requirements across the city in 2021.
2. Permitting duplex and triplex construction on all residential lots in the city, essentially removing single-family zoning.
3. Adding several zoning districts increasing the amount of housing that can be built near transit and commercial districts. Commercial districts allow three- to six-story buildings while transit districts allow 10- to 30-story buildings, which creates more units in high-demand areas.
4. Establishing minimum height requirements in high-density zones. This policy was incorporated in 2020.

Using housing supply data from the U.S. Census Bureau and average rent data from Apartment List shows the impact of these policies.

Between 2017 and 2022, the average rent in Minneapolis increased by 1.8% from $1,325 to $1,349, below the U.S. average of $1,393. Chicago rent increased by 16.5% from $1,373 to $1,599, even though Chicago’s population dropped as Minneapolis’ grew.

Minneapolis’ housing supply grew 12% over the five years as Chicago’s went up 4%.

Here are some details about Minneapolis’ changes.

Much of Minneapolis was zoned so only detached, single-family homes were allowed. Similarly, Chicago as of 2019 had 79% of residential land zoned for detached, single-family homes. That’s too much. Duplexes and triplexes should be allowed in most if not all residential areas in Chicago.

Changes in parking requirements make housing development cheaper and easier. Minneapolis, Seattle and Buffalo all removed parking requirements. The result was a remarkable surge in housing supply, with over half of the new development being projects that would have been illegal before the change. In Seattle, there were 40% fewer parking spaces, which simply aligned parking supply with demand as 40% of parking was never used before the change.

Chicago maintains comparatively stringent minimum parking requirements. It mandates varying spaces based on population density for a particular area. In the densest residential zones such as downtown commercial and residential areas, there must be 0.55 spaces for every dwelling unit. In less-dense downtown zones, the requirement could mandate as much as one parking space for every dwelling unit. In residential single-unit districts, the requirement can be up to two spaces per unit. Though Chicago has taken some strides in parking reform by selling spaces for redevelopment, substantial work remains to be done. Cities such as Minneapolis have proven mandates are not necessary; simply allowing demand to dictate supply can provide a cheaper and more efficient distribution of parking, enabling developers to construct more units at a cheaper rate.

Chicago could ramp up development of new affordable housing by following Minneapolis’ lead. Low-income earners could benefit because they pay a higher percentage of their income for rent.

All of this can be accomplished without new funding or raising the excessive taxes Chicagoans have repeatedly said are pushing them out of the city.

Zoning reforms work much better to make housing affordable than Mayor Brandon Johnson’s real estate transfer tax proposal. The proposed tax would hit real estate sales over $1 million, which mostly consist of rental and commercial properties. This will only stifle new housing projects and increase rent costs by making housing more expensive.