Lawmakers reconvened in St. Paul on Feb. 17, launching a compressed 2026 legislative session shaped by election-year dynamics and narrow partisan margins. With every legislative seat on the ballot this November, proposals with clear, constituent-level impact and bipartisan appeal are expected to move to the forefront.
Minnesota’s persistent housing shortage, rising home prices, and regulatory barriers dominated debate in 2025. Those pressures are only intensifying in 2026. At the center of the conversation is the return of the “Yes to Homes” framework, designed to expand housing options while maintaining local control where additional density makes sense.
“During the 2026 session, lawmakers need to hear clearly that every dollar added in fees, mandates, or delays is a dollar taken away from a Minnesota family’s ability to own a home,” says Mark Foster, vice president of legislative & political affairs at Housing First Minnesota. “The Yes to Homes framework is about removing artificial barriers while still respecting local planning and infrastructure realities.”
The bill had overwhelming support from the Housing Committee in the house and will be heard in the coming weeks at its next committee stops: House Elections Finance and Government Operations, and Senate State and Local Government.
What’s in the 2026 Yes to Homes Proposal
The 2026 bill builds on prior versions by combining baseline statewide standards with meaningful local flexibility.
Under the proposal, municipalities would designate a modest portion of residential and commercially zoned districts where additional housing types and density are allowed by right, using existing administrative approvals rather than discretionary reviews that add cost and uncertainty.
All municipalities, regardless of size, would be subject to core baseline provisions, including:
- Allowing accessory dwelling units (ADUs) in all residential districts
- Prohibiting requirements that mandate the creation of homeowners associations
- Limiting certain aesthetic mandates that increase costs for potential homebuyers
- Preventing minimum lot-size requirements exceeding one-eighth of an acre in residential greenfield development
Beyond those baseline reforms, the proposal uses a menu-based approach. Larger municipalities would select additional supply-supporting options, such as:
- Expanding the percentage of residential districts that allow up to four units per lot
- Increasing multifamily capacity in commercial districts
- Reducing or eliminating parking minimums
- Providing building-size bonuses for workforce, affordable, or senior housing
Importantly for builders, feasibility is a central focus. While municipalities would retain control over bulk standards—such as setbacks, floor-area ratios, and height limits—those standards could not be applied in ways that make newly allowed housing types impractical or impossible to build.
“There’s a big difference between allowing housing on paper and allowing housing that can actually be built,” Foster explains. “This bill is structured to ensure that when communities say ‘yes’ to more homes, the rules don’t quietly say ‘no’ afterward.”
A Focus on Starter Homes & Practical Constraints
Starter homes, which are largely absent from Minnesota’s new-construction market, are expected to be a defining issue this session. The Yes to Homes framework directly addresses long-standing zoning and lot-size barriers that have constrained entry-level housing production for decades.
At the same time, the proposal recognizes infrastructure realities. Additional housing would not be required in areas where infrastructure cannot support it, including floodplains, shorelands, and areas of critical environmental or historic concern. District selection would prioritize proximity to transit, commercial centers, parks, and schools, with clear transparency requirements for municipal decision-making.
Unlike budget years, the 2026 session does not require passage of a full biennial budget, placing added emphasis on cost-neutral solutions. For Housing First Minnesota members, that strengthens the case for zoning and land-use reforms that expand supply without relying on new state subsidies.
After years of study and debate, the message heading into the session is clear: Minnesota’s housing challenges are well documented. The 2026 Legislature will decide whether state policy finally aligns with the realities builders face, or whether outdated regulations will continue to limit housing production across the state.
Housing First Warns Legislature About Energy Code Impacts
Housing First Minnesota warned lawmakers about the impact of Minnesota’s upcoming residential energy code changes during a House Workforce & Labor committee hearing at the State Capitol. Despite these efforts, a bill to address the issue failed to advance out of committee on a party-line vote, with seven Republicans voting for and seven Democrats voting against.
Housing First Minnesota pushed back against strong claims from environmental and energy advocacy organizations that stronger building codes are necessary to reduce energy use and help Minnesota meet its climate goals. Several organizations claimed that stronger energy codes would have little to no impact on the cost of building a home.
Environmental groups also claimed that stronger energy codes would not restrict new construction—ignoring evidence from other cities and states where similar mandates have caused significant slowdowns, and even complete halts, in residential permitting.
Builders across Minnesota know firsthand that every new mandate added to the building code carries a cost. Eric Boyd, north region president at ARCXIS, noted in his testimony that there have been six-month permitting delays and $10,000-$30,000 cost increases per home in Washington. In Kansas City, the 2024 code was adopted and met with a six-month halt on the issuing of permits before an eventual repeal of the code.
In its letter to lawmakers and in testimony during the hearing, Housing First Minnesota warned that Minnesota is already on a statutory path toward significantly more aggressive residential energy codes in coming years.
Nick Erickson, senior director of housing policy for Housing First Minnesota, noted in his testimony, “In the next decade, we will see the energy code become the number one cost driver in Minnesota.” These policies risk adding substantial costs to new homes at a time when housing affordability is already under severe pressure.
Minnesota builders support improving energy efficiency and have already delivered dramatic improvements in home performance over the past two decades. Homes built today are significantly more energy efficient than those built just a generation ago. But piling additional mandates onto the building code without accounting for affordability risks makes Minnesota’s housing shortage even worse.
The hearing highlighted a growing divide at the Legislature between climate policy goals and housing affordability. Environmental advocacy groups are pushing for faster and more aggressive building code mandates as part of the state’s climate agenda. Builders and housing providers are warning lawmakers that policymakers must also consider the real-world consequences of those policies—particularly at a time when Minnesota already faces a severe housing shortage.
Housing First Minnesota emphasized that improving efficiency should not come at the expense of homeownership opportunities for Minnesota families.
While the proposal will not move forward at this time, Minnesota’s residential energy code will continue to evolve through the state’s rulemaking process, meaning the debate over costs, mandates, and housing affordability is far from over.
Housing First Minnesota will continue working with lawmakers and regulators to ensure energy efficiency improvements are implemented in a way that protects housing affordability and preserves homeownership opportunities for Minnesota families.
Minnesotans deserve homes that are both efficient and attainable—and Housing First will continue fighting to ensure policymakers don’t lose sight of that reality.
Ruling in Housing First Minnesota’s Permit Lawsuits Expected Soon
On Jan. 14, the Minnesota Court of Appeals heard oral arguments in Housing First Minnesota’s cases against the Cities of Corcoran and Dayton regarding building permit fees.
The association argues that both cities violated Minnesota Rule 1300.0160 by inflating permit fees far beyond the actual cost of service, turning them into an unlawful revenue source. A prior 2023 ruling confirmed Housing First Minnesota’s standing to bring the challenge; this new phase focuses squarely on whether the cities’ fee structures violate state law.
Members can expect a ruling in the case by mid-April.
2024 NEC Approved: What it Means for Members
In January, the Board of Electricity approved the 2024 National Electrical Code (NEC). Housing First Minnesota worked closely with the Department of Labor and Industry (DLI) to ensure housing affordability and the looming housing shortage remained top of mind amid the process. Following a meeting between Housing First Minnesota staff and DLI Commissioner Nicole Blissenbach, four amendments that would have drastically increased new construction costs were denied.
Members can expect the following approved changes:
- Surge Protection Devices (SPDs): All services, including new builds and panel replacements/upgrades, now require a Type 1 or Type 2 SPD to protect electronics from voltage surges.
- Exterior Emergency Disconnects: An external, readily accessible disconnect switch is required for all one- and two-family dwellings, allowing responders to safely shut off power.
- Expanded GFCI/AFCI Protection: The requirement for Ground-Fault Circuit-Interrupter (GFCI) and Arc-Fault Circuit-Interrupter (AFCI) protection is expanded, covering more residential outlets, kitchens, and bathrooms.
- Outdoor/Garage Outlets: There are now more stringent requirements for tamper-resistant and weatherproof outlets in garages and exterior locations.
- Dedicated Circuits & Electrification: Mandates for dedicated circuits are increasing for high-demand equipment, including HVAC systems, water heaters, and electric vehicle (EV) charging stations.
- Arc Flash Labeling (Non-Dwelling): NEC 110.16(B) requires permanent arc flash hazard markings on service and feeder equipment rated 1000 amps or more.
- Code Format Updates: The code includes formatting changes, such as single-column text, modern fonts, and the use of QR codes instead of traditional margin markers, to identify changes.
While there is currently no timeline for the residential building code to move on to the next stage of rulemaking nor for implementation, Housing First Minnesota will remain engaged in the process and keep members informed.
Housing First Minnesota Ends Litigation in City of Edina
Housing First Minnesota has issued the following public statement regarding the City of Edina’s repeal and replacement of its vegetation and tree replacement ordinances:
“By repealing and replacing its vegetation and tree replacement ordinances, the City of Edina has effectively acknowledged that these programs, as they existed prior to Housing First’s lawsuit, were likely to be ruled illegal under state law,” says CEO James Vagle. “The city’s ordinance amendment has improved the ordinance and addressed several of the concerns raised in our lawsuit.
As we’ve said from the outset, local governments must operate within the authority granted under state law, and homeowners should not be subjected to unlawful fees or requirements.
We continue to have concerns with aspects of the city’s tree ordinance; however, in light of the amendment, we will dismiss the lawsuit to see how the amended ordinance is implemented. Housing First Minnesota will remain engaged to ensure homeowners are protected from unlawful fees and exactions moving forward. If the new ordinance is abused, Housing First will not hesitate to return to court.”
Background
In October 2024, Housing First sent the City of Edina a letter demanding that it amend its ordinances to comply with state law. The city did not modify the ordinances, leading to Housing First’s lawsuit. According to city records, Edina had collected and retained nearly $1 million under its tree escrow program in recent years and earned interest on those funds, which it did not pay out.
On Aug. 25, 2025, Housing First Minnesota filed suit in Hennepin County District Court challenging the Tree Replacement Ordinance and Vegetation Ordinance.
On March 3, 2026, before a summary judgment hearing could be held, the City of Edina repealed and replaced its tree protection ordinance. Due to the repeal of this ordinance, Housing First Minnesota has withdrawn its complaint and will closely monitor how the city implements this new ordinance.
Growth Regions Falling Short on Housing Supply Due to Restrictive Zoning
A recent report from the Housing Affordability Institute found local zoning rules are significantly constraining housing production across key growth regions in Minnesota and warns that meaningful supply gains will require structural policy changes.
The report, “Lot Sizes and the Supply Gap: Housing Production Constraints in Minnesota’s Growth Regions,” evaluates zoning regulations in the St. Cloud, Twin Cities, and Rochester areas, concluding that current standards—particularly minimum lot size requirements—are limiting much-needed housing development.
Drawing on national housing production benchmarks from the American Enterprise Institute and the U.S. Chamber of Commerce, the analysis finds that production in the St. Cloud, Minneapolis-St. Paul-Bloomington, and Rochester regions could be substantially increased by permitting smaller lots in greenfield areas.
However, data from the Minnesota Zoning Atlas show that most communities in the St. Cloud and Twin Cities regions do not allow smaller, more affordable lots as a permitted use under base zoning. Instead, builders often must pursue planned unit developments (PUDs) or variances—adding time, cost, and uncertainty to projects. In contrast, zoning in the Rochester area more commonly allows smaller lots by right.
The report emphasizes that smaller lots improve land-use efficiency and better align new construction with today’s market realities, including affordability pressures and shifting buyer demand. “Housing production remains far below historic levels, with the state never recovering from the Great Recession,” says Erickson, who is also the executive director of Housing Affordability Institute. “Adjusting lot size and width standards would go a long way toward restoring housing production and expanding
homeownership opportunities.”
The report concludes that without broad-based zoning reforms such as lot size and width requirement changes in Minnesota’s growth regions, the supply of more affordable, smaller homes will remain constrained.
For Housing First Minnesota members, the findings reinforce what many builders experience firsthand: Restoring production levels and meeting demand will require policy frameworks that allow the market to deliver the housing Minnesotans need.
