>> Sreenivasan: ACROSS THE NATION, AS URBAN LIVING BECOMES MORE POPULAR, CITIES ARE FACING HOUSING SHORTAGES AND ARE SEARCHING FOR SOLUTIONS. FROM OREGON TO CALIFORNIA, GOVERNMENTS ARE ALTERING DECADES-OLD ZONING RULES THAT HAVE LONG BEEN CONSIDERED SACRED. MINNEAPOLIS, MINNESOTA, IS AT THE FOREFRONT OF ONE BIG CHANGE. NEWSHOUR WEEKEND'S MEGAN THOMPSON HAS MORE. >> Reporter: JOHN EDWARDS, A FREELANCE GRAPHIC DESIGNER, LIVED IN SOUTH FLORIDA FOR MOST OF HIS LIFE. THEN, ABOUT SEVEN YEARS AGO, HE DECIDED HE WANTED A CHANGE. >> MINNEAPOLIS HAS A STRONG ECONOMY, HAS HIGH QUALITY OF LIFE, AND SO I MOVED HERE. >> Reporter: EDWARDS MOVED INTO A MINNEAPOLIS NEIGHBORHOOD CALLED "THE WEDGE." IT'S A WALKABLE AREA THAT ALLOWS HIM TO LIVE WITHOUT THE EXPENSE AND ENVIRONMENTAL IMPACTS OF OWNING A CAR. >> SO, WE'VE GOT PROBABLY THE BEST TRANSIT IN MINNEAPOLIS. WE HAVE ACCESS TO GREAT BIKE INFRASTRUCTURE. THERE'S A HANDFUL OF GROCERY STORES WITHIN WALKING DISTANCE, A HARDWARE STORE. EVERYTHING YOU'D WANT TO HAVE IN YOUR NEIGHBORHOOD, WE HAVE... WE HAVE IT. >> Reporter: TURNS OUT, A LOT OF OTHER PEOPLE ARE MOVING TO MINNEAPOLIS, TOO, WITH ITS THRIVING ECONOMY, FRIENDLY PEOPLE, AND AMPLE LAKES AND PARKS. THE CITY'S POPULATION'S BEEN RISING FASTER THAN AT ANY POINT IN THE LAST 70 YEARS, INCREASING BY MORE THAN 12% TO ALMOST 430,000 BETWEEN 2010 AND 2018. BUT THE NUMBER OF NEW HOUSING UNITS HASN'T KEPT PACE. ONE REPORT SHOWED THAT AMONG SIMILARLY-SIZED CITIES, THE MINNEAPOLIS METRO AREA HAS THE THIRD LARGEST HOUSING PRODUCTION SHORTFALL. AS A RESULT, EDWARDS SAYS, HE'S SEEN RENTS AND HOME PRICES SPIKE. >> SOME PEOPLE DON'T MOVE BECAUSE THEY KNOW, YOU KNOW, FINDING A NEW APARTMENT, THEY'LL BE PAYING AN EXTRA $100 OR WHATEVER IN RENT, AND THEY CAN'T AFFORD IT. >> Reporter: JACOB FREY IS THE MAYOR OF MINNEAPOLIS. >> THE REALITY IS, IS THAT WHEN YOU HAVE DEMAND THAT IS SKY-HIGH AND YOU DON'T HAVE THE SUPPLY TO ACCOMMODATE, THE PRICES CONTINUOUSLY GET JACKED UP. >> Reporter: ARE YOU SEEING AFFORDABLE HOUSING OPTIONS DISAPPEAR FROM THIS AREA? >> ABSOLUTELY. WHETHER IT BE RENTAL OR FROM A HOME OWNERSHIP, THEY ARE DWINDLING, AND THEY'RE DWINDLING FAST. >> Reporter: TABITHA MONTGOMERY LEADS THE NEIGHBORHOOD ASSOCIATION IN POWDERHORN PARK, A FEW MILES AWAY FROM THE WEDGE. >> SO, POWDERHORN PARK NEIGHBORHOOD IS AMAZING. IT'S EXTREMELY VIBRANT AND ECLECTIC. OVER 50% OF THE COMMUNITY IDENTIFY AS PERSONS OF COLOR. >> Reporter: THE AREA IS ONE OF THE MOST DIVERSE PARTS OF MINNEAPOLIS, WHERE AROUND 20% LIVE BELOW THE POVERTY LINE. IN A CITY WITH VIRTUALLY NO RENT CONTROL, THE HOUSING SHORTAGE HAS MEANT THAT LOW-INCOME, LONGTIME RESIDENTS ARE BEING PRICED OUT OF THE NEIGHBORHOOD, SAYS MONTGOMERY. >> YOUR HOUSING OPTIONS HAVE BECOME SIGNIFICANTLY IMPAIRED, IS WHAT I WOULD SAY. SO, EVEN HOME OWNERSHIP IS BECOMING CHALLENGING WHEN PEOPLE ARE FACING CASH BIDS, CASH OFFERS. AND SO, HOMES ARE BEING SOLD SAME-DAY. SO, I THINK THAT WE'RE CERTAINLY FEELING THE SQUEEZE. >> Reporter: LAST YEAR, TO ADDRESS THIS LACK OF SUPPLY, CITY LEADERS CAME UP WITH A BUNCH OF IDEAS. ONE IN PARTICULAR RAISED EYEBROWS BECAUSE IT WOULD COMPLETELY ELIMINATE SINGLE-FAMILY ZONING, THE RULES THAT SAY ON CERTAIN LOTS ONLY SINGLE-FAMILY HOMES CAN BE BUILT. NO LARGE CITY HAD ENTIRELY DONE AWAY WITH SINGLE-FAMILY ZONING BEFORE. THE NEW RULES WOULD ALLOW BUILDINGS WITH UP TO THREE UNITS TO BE BUILT ON ANY RESIDENTIAL LOT IN THE CITY. >> THE SINGLE-FAMILY HOME NEIGHBORHOOD HAS ALWAYS BEEN THE SACRED COW OF... OF ZONING. >> Reporter: EDWARD GOETZ IS A PROFESSOR AND DIRECTOR OF THE CENTER FOR URBAN AND REGIONAL AFFAIRS AT THE UNIVERSITY OF MINNESOTA. HE SAYS WHILE CITY ZONING RULES DON'T USUALLY GET A LOT OF ATTENTION, THEY HAVE A BIG IMPACT. >> THEY DETERMINE WHAT CAN BE BUILT WHERE. THEY CAN DETERMINE HOW MUCH OF THAT CAN BE BUILT. THEY DETERMINE ALL THE... THE DENSITY, THE... THE SETBACKS. THERE ARE SO MANY DIFFERENT DIMENSIONS THAT ARE COVERED BY A... BY A ZONING ORDINANCE. >> Reporter: CITIES BEGAN ENACTING SINGLE-FAMILY ZONING IN THE EARLY 1900s, LEADING TO THE CREATION OF THAT CLASSIC AMERICAN NEIGHBORHOOD: BLOCK AFTER QUIET BLOCK OF SINGLE-FAMILY HOMES. BUT, GOETZ SAYS, THE PRACTICE HAD AN UNDERSIDE. IN SOME CASES, IT ENDED UP HELPING PERPETUATE SEGREGATION. SINGLE-FAMILY HOMES TEND TO COST MORE, MAKING THESE NEIGHBORHOODS AVAILABLE ONLY TO THOSE WITH MONEY, WHO WERE OFTEN MOSTLY WHITE. >> AND YOU SAW THE EMERGENCE OF A LOT OF DIFFERENT TECHNIQUES FOR CREATING ZONING REQUIREMENTS THAT EFFECTIVELY KEPT OUT LOW-COST HOUSING, AND, BY EXTENSION, THEN, KEPT RACIAL BARRIERS IN PLACE, AS WELL. >> Reporter: IN MINNEAPOLIS, WHICH IS ABOUT 60% WHITE, ALMOST THREE-QUARTERS OF THE CITY'S RESIDENTIAL PROPERTY WAS ZONED FOR SINGLE FAMILY HOMES. OTHER NEIGHBORHOODS WITH MORE AFFORDABLE MULTI-FAMILY HOUSING, LIKE AREAS AROUND POWDERHORN PARK, CAME TO HAVE MORE PEOPLE OF COLOR. SINGLE-FAMILY ZONING HAS HAD OTHER CONSEQUENCES, TOO, AND NOT JUST IN MINNEAPOLIS. WITH FEWER PEOPLE ALLOWED TO LIVE ON EACH LOT, CITIES SPRAWL AS THEIR POPULATION GROWS. AND THAT USUALLY MEANS RESIDENTS NEED CARS TO GET AROUND, LEADING TO CONGESTION AND INCREASED EMISSIONS. >> I THINK THERE'S JUST A GROWING UNDERSTANDING THAT PERHAPS THE ERA OF THE SINGLE-FAMILY HOME DISTRICT IS SOMETHING THAT WE CAN NO LONGER AFFORD IN TERMS OF THE USE OF LAND. AND I THINK THAT THERE HAS BEEN A SHIFT IN URBAN PLANNING THINKING TOWARDS MORE DENSIFICATION AND FOR MORE INTENSIFICATION OF LAND USE. >> Reporter: SO, LEADERS IN MINNEAPOLIS PROPOSED THE IDEA OF ELIMINATING SINGLE-FAMILY ZONING ALTOGETHER TO INCREASE DENSITY, CREATE MORE HOUSING UNITS, AND HELP ADDRESS RACIAL SEGREGATION. IN 2018, THE PROPOSED BAN WAS INCLUDED IN A MASSIVE CITY PLANNING DOCUMENT RELEASED EVERY TEN YEARS THAT REQUIRES A CITY COUNCIL VOTE. THE PLAN INCLUDED 100 POLICY PROPOSALS ON EVERYTHING FROM HOUSING, TO TRANSPORTATION, TO THE ENVIRONMENT. IT USUALLY GETS LITTLE PUBLIC ATTENTION, BUT, THANKS IN LARGE PART TO THE ZONING BAN, THIS TIME WAS DIFFERENT. >> PEOPLE ARE GETTING PRICED OUT OF THE CITY. >> I OPPOSE THE PLAN. >> WE DO NEED MORE HOUSING. OUR POPULATION IS GROWING INCREDIBLY. >> I FEEL STRONGLY THAT MUCH MORE STUDY AND PUBLIC INPUT ARE NEEDED. >> Reporter: JOHN EDWARDS BECAME SO INTERESTED IN HOUSING ISSUES, HE HELPED START A GROUP CALLED "NEIGHBORS FOR MORE NEIGHBORS." >> IT'S IMPORTANT IN TERMS OF CLIMATE CHANGE THAT WE ALLOW PEOPLE WHO WANT TO LIVE THIS WAY, TO LIVE WITHOUT A CAR, TO WALK PLACES, TO TAKE TRANSIT. >> Reporter: "NEIGHBORS FOR MORE NEIGHBORS" HELPED MOBILIZE SUPPORT FOR THE PLAN, DISTRIBUTING LAWN SIGNS AROUND THE CITY AND GETTING PEOPLE TO SHOW UP AT CITY PLANNING HEARINGS. >> I SUPPORT THE 2040 PLAN. WE JUST NEED MORE HOUSING DIVERSITY, IN GENERAL. >> Reporter: BUT OPPOSITION WAS STRONG, TOO. >> THIS COMMUNITY'S ANGRY. THIS COMMUNITY'S DIVIDED. >> YOU SHOULDN'T BE TEARING DOWN OUR NEIGHBORHOOD. >> Reporter: MANY OF THE OPPONENTS WHO ATTENDED CITY MEETINGS WERE FROM NEIGHBORHOODS ZONED MOSTLY FOR SINGLE-FAMILY HOMES. ARE YOU AGAINST DENSITY? >> NO, NOT AT ALL. BUT I'M... I'M FOR DENSITY DONE WELL. >> Reporter: LISA McDONALD IS A FORMER MEMBER OF THE CITY COUNCIL WHO ALSO ONCE RAN THE CITY'S ZONING COMMITTEE. SHE CO-FOUNDED THE GROUP "MINNEAPOLIS FOR EVERYONE," WHICH OPPOSED THE PLAN. >> AND THE PROBLEM IS, YOU WANT TO PUT DENSITY WHERE YOU GET THE BIGGEST BANG FOR YOUR BUCK. SO, THAT'S ON TRANSIT LINES, COMMERCIAL CORRIDORS WHERE THINGS ARE ALREADY BUILT UP, IN ORDER TO TAKE ADVANTAGE OF THE INFRASTRUCTURE IMPROVEMENTS YOU'VE ALREADY MADE ON WHAT'S AVAILABLE. IF YOU JUST THROW THREE-PLEXES OUT ANYPLACE AND ANYPLACE, YOU DON'T GET THE KIND OF DENSITY THAT REALLY WORKS. >> Reporter: McDONALD WORRIES SINGLE-FAMILY HOMES WILL BE TORN DOWN, AND DESIGN GUIDELINES WON'T GO FAR ENOUGH TO PROTECT A NEIGHBORHOOD'S CHARACTER. >> PARTICULARLY IN TERMS OF WORKING WITH DEVELOPERS TO SAY, "THIS IS WHAT YOU CAN BUILD, THIS IS WHAT YOU HAVE TO DO, AND YOU HAVE TO MEET THESE." >> Reporter: AND McDONALD POINTS OUT THAT EVEN IF ADDING NEW TRIPLEXES AROUND TOWN DOES INCREASE SUPPLY, IT DOESN'T MEAN THEY'LL BE AFFORDABLE. >> I MEAN, I THINK WE COULD END UP WITH ALL THIS DENSITY, ALL THIS MARKET-RATE HOUSING AND REALLY NO MORE AFFORDABILITY. >> Reporter: MANY NEIGHBORHOODS THAT NEED AFFORDABLE UNITS ARE ALREADY ZONED FOR MULTI-FAMILY HOMES. TABITHA MONTGOMERY QUESTIONS HOW ADDING UNITS IN OTHER PARTS OF THE CITY WILL HELP HER COMMUNITY OF POWDERHORN PARK. >> I THINK ANY STEP WHERE A CITY IS TRYING TO THINK BROADLY ABOUT "HOW DO WE GET OURSELVES OUT OF THIS MESS, HOW DO WE MOVE THE NEEDLE IN TERMS OF THE UNITS THAT WE'RE CURRENTLY NOT REPLACING" IS A POSITIVE STEP. I JUST DON'T THINK THAT IT'S A SILVER BULLET. IT'S NOT GOING TO BE THE ANSWER TO ALL OF OUR PROBLEMS OR ALL OF THE ILLS, HISTORICALLY, IN TERMS OF WHERE PEOPLE HAVE BEEN "ALLOWED TO LIVE," AND/OR, RIGHT NOW, THE PRESSURES OF SUPPLY AND DEMAND AND NOT HAVING ENOUGH HOUSING STOCK TO GO AROUND FOR ALL THE PEOPLE WHO WANT TO LIVE IN THE CITY. >> Reporter: AND MAYOR JACOB FREY AGREES THE ZONING CHANGE ALONE ISN'T A SILVER BULLET. >> CHANGING THE ZONING IS NOT GOING TO SOLVE THE WHOLE THING, BUT IT IS ONE REALLY IMPORTANT FACET. YOU'VE GOT TO FIRST CHANGE THE ZONING TO QUITE SIMPLY ALLOW FOR AFFORDABLE HOUSING IN SOME OF THESE NEIGHBORHOODS. >> Reporter: WILL THIS ACTUALLY LEAD TO MORE AFFORDABLE HOUSING, THOUGH? I MEAN, THE MARKET IS SO TIGHT HERE. THERE IS A CONCERN THAT THE UNITS THAT ARE GOING TO GET BUILT ARE STILL GOING TO GET BUILT IN THE MOST DESIRABLE PARTS OF THE CITY, AND THEY'RE GOING TO BE MARKET-RATE UNITS, AND THEY'RE STILL GOING TO BE UNAFFORDABLE FOR A LOT OF PEOPLE. >> THE SINGLE-FAMILY ZONING ISSUE IS AN IMPORTANT PIECE, BUT IT'S JUST ONE PART OF AN OVERARCHING PLAN TO ATTACK THE AFFORDABLE HOUSING CRISIS THAT WE'RE DEALING WITH HERE IN MINNEAPOLIS AND THAT MANY CITIES ARE SEEING THROUGHOUT THE ENTIRE COUNTRY. >> Reporter: FREY SAYS THE CITY'S DOING A LOT MORE THAN JUST CHANGING ZONING. THIS YEAR'S BUDGET INCLUDED $40 MILLION FOR AFFORDABLE HOUSING, THREE TIMES THE CITY'S PREVIOUS LARGEST INVESTMENT. AND THE MAYOR'S PROPOSING ANOTHER $31 MILLION FOR NEXT YEAR. THE CITY'S ALSO PLANNING TO IMPLEMENT SOMETHING CALLED "INCLUSIONARY ZONING," REQUIRING DEVELOPERS TO INCLUDE AFFORDABLE UNITS IN LARGE, NEW APARTMENT BUILDINGS. AND THE MAYOR HAS PLANS TO TACKLE HOMELESSNESS AND STRENGTHEN TENANTS' RIGHTS. AS FOR THE SINGLE-FAMILY ZONING CHANGE, IT WAS OFFICIALLY ADOPTED BY THE MINNEAPOLIS CITY COUNCIL EARLIER THIS MONTH AND WILL GO INTO EFFECT ON JANUARY 1. >> YOU'RE NOT GOING TO SEE MASSIVE CHANGE IN THE IMMEDIATE FUTURE, BUT IT WILL ALLOW OVER TIME FOR THE CITY TO EVOLVE. WHICH, BY THE WAY, IS EXACTLY WHAT CITIES DO. THEY EVOLVE.
