SF 3418

Introduction - 94th Legislature (2025 - 2026)

Posted on 04/24/2025 09:20 a.m.

A bill for an act
relating to local government; requiring certain cities to enact zoning changes related
to residential density and permitted uses; prohibiting certain written instruments
relating to real estate; amending Minnesota Statutes 2024, section 462.358, by
adding subdivisions; proposing coding for new law in Minnesota Statutes, chapters
462; 507.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [462.3575] CITY MINIMUM RESIDENTIAL DENSITIES; ZONING
REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Accessory dwelling unit" means any building that contains one residential dwelling
unit that is used, occupied, intended for use, or designed to be built, used, rented, leased,
let, or hired out to be occupied for living purposes and is located on the same property as
an existing single-family detached home and built to the standards in the Minnesota
Residential Code, Minnesota Rules, chapter 1309. An accessory dwelling unit may be
attached or detached from the existing dwelling. Accessory dwelling unit does not include
sacred communities and micro-unit dwellings under section 327.30 and temporary family
health care dwellings under section 462.3593.
new text end

new text begin (c) "Affordable housing development" means a multifamily residential development in
which:
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new text begin (1) at least 20 percent of the residential units are for households whose incomes do not
exceed 50 percent of the greater of the statewide or area median income, or at least 40
percent of the residential units are for households whose incomes do not exceed 60 percent
of the greater of the statewide or area median income; and
new text end

new text begin (2) the deed or declaration for an affordable residential unit contains a restrictive covenant
requiring the property to remain affordable housing for at least 30 years.
new text end

new text begin (d) "Aggrieved party" means a person who can demonstrate a specific personal and legal
interest, as distinguished from a general interest, who has been or is likely to be specially
and injuriously affected by a decision.
new text end

new text begin (e) "City" means a home rule charter or statutory city with a population of 10,000 or
more.
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new text begin (f) "Commercially zoned district" means an area in a city that is zoned to allow the use
of land for buildings, in whole or in part, engaging in the sale, lease, rental, or trade of
products, goods, and services.
new text end

new text begin (g) "Duplex" means a two-family home classified as an IRC-2 in the State Building
Code and not meeting the definition of townhouse.
new text end

new text begin (h) "Fourplex" means a building containing four residential dwelling units intended for
nontransient occupancy and not meeting the definition of townhouse.
new text end

new text begin (i) "Lot" means any contiguous parcel of land in the possession of, owned by, or recorded
as the property of the same claimant or person.
new text end

new text begin (j) "Major transit stop" means a stop or station for a guideway or for a busway, as the
terms are defined in section 473.4485, subdivision 1.
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new text begin (k) "Metropolitan area" has the meaning given in section 473.121, subdivision 2.
new text end

new text begin (l) "Middle housing" means residential properties that are compatible in scale, form, and
character with single-family detached homes and includes all of the following housing types:
new text end

new text begin (1) duplexes;
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new text begin (2) townhouses;
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new text begin (3) triplexes;
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new text begin (4) fourplexes; and
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new text begin (5) single-family detached homes.
new text end

new text begin (m) "Multifamily residential development" means a single residential building with at
least ten units or a mixed-use building with commercial use on the ground floor and in
which at least half of the usable square footage is for residential use.
new text end

new text begin (n) "Residential dwelling unit" or "unit" means a residential dwelling unit for the use of
a single owner or tenant and applies to any type of residential structure unless otherwise
specified.
new text end

new text begin (o) "Single-family detached home" means any building that contains one residential
dwelling unit that is used, occupied, intended for use, or designed to be built, used, rented,
leased, let, or hired out to be occupied for living purposes that is not attached to another
structure.
new text end

new text begin (p) "Townhouse" means a single-family residential dwelling unit, considered a separate
building by the State Building Code, that is constructed in a group of three or more attached
units in which each unit extends from the foundation to the roof and has open space on at
least two sides.
new text end

new text begin (q) "Triplex" means a building containing three residential dwelling units intended for
nontransient occupancy and not meeting the definition of townhouse.
new text end

new text begin Subd. 2. new text end

new text begin Cities of the first, second, and third class; required residential densities. new text end

new text begin (a)
A city of the first, second, or third class must allow duplexes as a permitted use in at least
33 percent or more of the area in each residential zoning district within the city, including
districts zoned for single-family detached homes.
new text end

new text begin (b) A city of the first or second class must allow triplexes, fourplexes, or townhomes as
a permitted use in at least 25 percent or more of the area in each residential zoning district
within the city, including districts zoned for single-family detached homes.
new text end

new text begin (c) A city must adopt a zoning ordinance by June 30, 2026, to comply with the
requirements of paragraph (a) or (b), as applicable.
new text end

new text begin Subd. 3. new text end

new text begin Accessory dwelling units authorized. new text end

new text begin (a) A city of the first, second, or third
class must allow at least one accessory dwelling unit to be built on any residential lot
containing a single-family detached home in a city, regardless of total lot size, street frontage,
or connectivity between the accessory dwelling unit and the primary dwelling unit on the
lot, so long as the accessory dwelling unit is built in conformance with:
new text end

new text begin (1) the State Building Code and Minnesota Rules, chapter 1309;
new text end

new text begin (2) minimum spacing requirements for emergency services access; and
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new text begin (3) the smallest residential setback in municipal code.
new text end

new text begin (b) A city may require an accessory dwelling unit to remain part of the same parcel as
the primary dwelling and prohibit the accessory dwelling unit from being sold separately
from the primary dwelling on the lot.
new text end

new text begin (c) A city must adopt a zoning ordinance by June 30, 2026, to comply with the
requirements of paragraph (a).
new text end

new text begin Subd. 4. new text end

new text begin Multifamily residential developments in commercial districts. new text end

new text begin (a) A city of
the first, second, or third class must allow multifamily residential developments as a permitted
use in at least 25 percent of the area in commercially zoned districts.
new text end

new text begin (b) A city may require a multifamily residential development authorized under this
subdivision to comply with all municipal zoning standards, including the adequacy of
existing public infrastructure.
new text end

new text begin (c) A city must adopt a zoning ordinance by June 30, 2026, to comply with the
requirements of paragraph (a).
new text end

new text begin Subd. 5. new text end

new text begin Encouraging development of missing middle and multifamily housing. new text end

new text begin A
city of the first, second, or third class must adopt an ordinance by June 30, 2026, that includes
a minimum of four of the housing strategies in clauses (1) to (11) to encourage the
development of missing middle and multifamily housing. Strategies that currently exist in
a city ordinance prior to the enactment date of this section shall count toward the minimum
number of strategies required to be adopted under this section. The housing strategies are
as follows:
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new text begin (1) create density bonuses, including an increase in floor area ratio and lot coverage if
the housing is affordable housing;
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new text begin (2) reduce off-street parking requirements to no more than one parking space per dwelling
unit for multifamily housing;
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new text begin (3) eliminate off-street parking requirements for middle housing that is located within
one-quarter mile of a major transit stop;
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new text begin (4) increase the number of residential dwelling units per acre;
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new text begin (5) eliminate minimum lot sizes or reduce the existing minimum lot size required by at
least 25 percent;
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new text begin (6) eliminate setback requirements or reduce existing setback requirements by at least
25 percent for at least one zoning district;
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new text begin (7) increase building height limits for middle or multifamily housing by at least 25
percent;
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new text begin (8) allow administrative, nondiscretionary development approvals to middle housing
containing more than one residential dwelling unit;
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new text begin (9) allow administrative, nondiscretionary development approvals for multifamily
housing;
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new text begin (10) establish and capitalize a local housing trust fund; and
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new text begin (11) permit multifamily housing as a by-right use in 50 percent of commercial districts.
new text end

new text begin Subd. 6. new text end

new text begin Limitation on aesthetic requirements. new text end

new text begin (a) Unless requested by the applicant,
a municipality must not condition the approval of a residential building permit, residential
subdivision development, or residential planned unit development for new single-family
detached homes, duplexes, or townhouses on:
new text end

new text begin (1) the minimum number or type of exterior finish materials, including siding or exterior
cladding;
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new text begin (2) the presence of gables, decks, balconies, or porches; and
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new text begin (3) the minimum square footage resulting in a garage larger than a two-car garage.
new text end

new text begin (b) Except as provided in this subdivision, a municipality may impose other architectural
design standards to ensure compatibility in scale and form with adjacent residential lots.
new text end

new text begin (c) Notwithstanding paragraph (a), a city may, via ordinance, encourage, reward, or
incentivize, but not mandate, the use of a particular cladding material or the inclusion of
gables, decks, balconies, or porches.
new text end

new text begin (d) This subdivision does not apply to properties that are designated historic sites or
properties in designated historic districts.
new text end

new text begin Subd. 7. new text end

new text begin Administrative review process. new text end

new text begin (a) Notwithstanding any law, rule, or ordinance
to the contrary, a city must establish an administrative review process subject to the time
constraints and process in section 15.99 for multifamily developments with four or fewer
residential units. The administrative review process must review all aspects of the
development application and comments submitted under paragraph (b), and the application
must be approved or denied without adherence to public hearing requirements in section
462.357.
new text end

new text begin (b) The administrative review process may include a notice of the proposed development
mailed to each owner or tenant of an affected property situated completely or partly within
350 feet of the proposed development. An aggrieved party that owns an affected property
may be granted the ability to provide written comments on material impacts the development
will have on an affected property that are provided to the applicant and made publicly
available. A city may require the developer to host a neighborhood informational meeting
for surrounding property owners to discuss the proposed development and allow for feedback
from existing property owners.
new text end

new text begin (c) A city may assess a fee that is fair, reasonable, and proportionate to the costs a city
incurs to provide notice requirements in this subdivision.
new text end

new text begin Subd. 8. new text end

new text begin Municipal standards. new text end

new text begin (a) A city may require any development authorized in
this section to comply with any standards, performance conditions, or requirements, including
the adequacy of existing public infrastructure and a city's comprehensive plan, imposed by
a city to promote the public health, safety, and general welfare.
new text end

new text begin (b) Nothing in this section authorizes a residential development that is prohibited by a
state or federal law, or an ordinance adopted pursuant to a state or federal law, that protects
floodplains, areas of critical concern, wild and scenic rivers, or shoreland; conflicts with an
approved plan under chapter 103B; or otherwise restricts development to protect public
health, the environment, or scenic areas.
new text end

new text begin Subd. 9. new text end

new text begin State Building Code; State Fire Code. new text end

new text begin This section does not modify any
requirement in the State Building Code or State Fire Code.
new text end

Sec. 2.

Minnesota Statutes 2024, section 462.358, is amended by adding a subdivision to
read:

new text begin Subd. 12. new text end

new text begin Street impact fee. new text end

new text begin (a) In addition to all other existing authority of a
municipality, a municipality may impose a fee as set by ordinance on an applicant based
on the net buildable acreage of the subdivision, the subdivision's impact on the municipality's
transportation system, or the municipality's transportation plan.
new text end

new text begin (b) The municipality must place any cash payments received in a special fund that may
be used only for costs related to the municipality's approved transportation plan, including
the acquisition and construction, maintenance, or improvement of streets, roads, intersections,
and related transportation infrastructure.
new text end

new text begin (c) In addition to any other authority, the municipality may deny the approval of a
subdivision based solely on an inadequate transportation system within the municipality.
new text end

new text begin (d) Previously subdivided property, from which the municipality has received a street
impact fee, that is resubdivided with the same number of lots is exempt from street impact
fee requirements. If, as a result of resubdividing the property, the number of lots is increased,
the street impact fee applies only to the net increase of lots.
new text end

Sec. 3.

Minnesota Statutes 2024, section 462.358, is amended by adding a subdivision to
read:

new text begin Subd. 13. new text end

new text begin Street impact fee nexus. new text end

new text begin (a) There must be an essential nexus between the
fee imposed under subdivision 12 and the municipal purpose for the fee. The fee must bear
a rough proportionality to the need created by the proposed subdivision or development.
new text end

new text begin (b) If a municipality is given written notice of a dispute over a proposed fee before the
municipality's final decision on an application, a municipality must not condition the approval
of any proposed subdivision or development on an agreement to waive the right to challenge
the validity of a fee.
new text end

new text begin (c) An application must proceed as if the fee had been paid, pending a decision on the
appeal of a dispute over a proposed fee, if:
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new text begin (1) the person aggrieved by the fee puts the municipality on written notice of a dispute
over a proposed fee;
new text end

new text begin (2) prior to the municipality's final decision on the application, the fee is deposited in
escrow; and
new text end

new text begin (3) the person aggrieved by the fee appeals under section 462.361 within 60 days of the
approval of the application.
new text end

new text begin If an appeal is not filed by the deadline or the person aggrieved by the fee does not prevail
on the appeal, the funds paid into escrow must be transferred to the municipality
new text end

Sec. 4.

new text begin [507.185] PROHIBITED RESTRICTIONS; COMMON INTEREST
COMMUNITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Common interest community" has the meaning given in section 515B.1-103, clause
(10), and includes common interest communities subject to chapter 515, 515A, or 515B.
new text end

new text begin (c) "Provision" embraces all clauses, stipulations, restrictions, covenants, and conditions.
new text end

new text begin (d) "Written instrument relating to or affecting real estate" embraces every writing
relating to or affecting any right, title, or interest in real estate and includes plats and wills.
new text end

new text begin Subd. 2. new text end

new text begin Prohibited restrictions. new text end

new text begin A common interest community must not include in a
written instrument relating to real property made on or after August 1, 2025, any provision
prohibiting the conveyance, mortgage, encumbrance, or lease of any real estate to any person
based on a restriction for the real property that requires:
new text end

new text begin (1) a minimum home size or height;
new text end

new text begin (2) a minimum building price or sale price;
new text end

new text begin (3) restrictions on the type of parking structures attached or adjacent to a single- or
double-occupancy residential home; and
new text end

new text begin (4) restrictions on the building material available for the construction of a home or
imposes architectural styles that are designed to affect the exterior appearance of the home
or the fencing that may be used around the home for the construction.
new text end

new text begin Subd. 3. new text end

new text begin Restriction void and unenforceable. new text end

new text begin A provision included in a written
instrument relating to or affecting real estate in violation of this section is void and
unenforceable and shall be severed from the written instrument. The written instrument
shall have full force and effect in all other respects and shall be construed as if no prohibited
provision were contained therein.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to real estate
conveyances executed on or after that date.
new text end