Rochester seeks to boost housing with new zoning and programs

ROCHESTER — With a tight market and a community poised for massive growth over the next few years, the Rochester area is stepping up its efforts to build more, and more affordable, housing.

Earlier this month, the Rochester City Council approved changes to the city’s zoning codes aimed at expanding areas of the city where housing could be built as well as reducing requirements for multi-family projects.

This includes rezoning commercial neighborhoods to allow for mixed-use housing, reducing the minimum lot size for residential neighborhoods other than single-family dwellings from 5,000 square feet to 3,000 square feet, and removing density limits and minimum parking requirements on multi-family dwellings.

The changes also reduced public hearings for any project in development in an effort to streamline the development process. John Eischen of the Rochester Area Builders trade group noted that projects take about 18 months from start to finish, and costs only increase the longer a project drags on.

Dubbed the Unified Development Code, the changes will go into effect next year.

By reducing minimum lot sizes and encouraging multi-family housing, Rochester joins a growing number of cities in Minnesota and across the country seeking to make housing more affordable for all and fairer for residents of color.

In Olmsted County, 77% of homes are occupied by the people who own them. At the same time, only 22% of black families in Olmsted County own the home they live in. About three-quarters of Olmsted County residents live in Rochester.

Single-family zoning accounts for about 52% of the land in Rochester, with multi-family zoning only 18%. Under the unified development code, multifamily zoning would increase to approximately 28% of city land.

While Rochester isn’t looking to eliminate single-family zoning like Minneapolis has, local officials say they’re emphasizing a variety of housing to offer people moving into the community.

“We’re not going to tell you how many units the market can support,” said Ryan Yetzer, the city’s assistant director of community development. “We’ll let the market determine that.”

A 2020 Olmsted County Housing Study projected that 18,000 more homes would be needed by 2030, with about 14,000 in Rochester alone.

Rochester must step up its housing development to meet this forecast. Over the past five years, Rochester has added approximately 5,600 housing units.

Nearly 3,900 of these units were apartments and other types of multi-family dwellings, with another 1,300 coming from single-family dwellings and more than 300 from townhouses.

Rochester and Olmsted County have designed several programs in recent years to encourage more housing on a smaller scale.

The city set aside $500,000 in federal aid earlier this year to reimburse some city permit fees on homes costing $350,000 or less to build. City officials are also discussing a pilot program for secondary suites — secondary living spaces on lots that homeowners could rent out or use for other family members.

Olmsted County launched a repayable loan program last fall using $5 million in federal assistance to provide up to $10,000 to people building or buying new homes.

Local builders say there is a growing market for condominiums and more apartments, while housing officials say there could be more interest in duplexes, triplexes or quadruplexes and others types of smaller multi-family dwellings.

“We really have a great group of people working on the housing supply challenge,” Eischen said.

Destination Medical Center (DMC), the investment initiative to transform downtown Rochester into an attractive international hub, is in talks with developers on seven housing projects and five hotel projects that could add 750 to 1,000 housing units over the next few years, as well as 300 to 500 hotel units.

Kevin Bright, DMC’s director of energy and sustainability, said the group wants to add 4,000 homes by 2030 to meet Olmsted County’s projected needs. DMC can help fund public infrastructure for future projects, but Bright said the key is to encourage housing for the region’s workforce and middle-class families.

“It’s really the kind of sticking point of figuring out how we can build affordability into these development projects as they come up,” he said.

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