Demand-driven supply? Minneapolis fourplex proposal is new old idea

The ambitious young transformationists who lately have taken power at Minneapolis City Hall seem on the verge of rediscovering a basic truth that has long eluded many public policymakers.

The insight they're flirting with is this: If you want to see more of a certain thing in a community, a good first step is to stop prohibiting it.

Legalization — or even, egad, deregulation — is the basic breakthrough idea behind a much-discussed proposal to henceforth allow the creation of new or converted fourplexes more or less anywhere in Minneapolis. This fourplex free market is being pushed by newly installed Mayor Jacob Frey and City Council President Lisa Bender, among others, as part of an update to the city's comprehensive plan that was released in draft form last week and will be hotly debated.

The hope is that relaxing limits on fourplexes would help ease a shortage of affordable housing, often deemed a "crisis," that, at least in part, public policy created.

Today, new four-unit rental buildings are outlawed for about 80 percent of Minneapolis lots — a state of affairs largely resulting from 40-plus years of "downzoning" in the city, a movement through which advocates for quality of life, homeownership, the deconcentration of poverty and other fashionable objectives have made it more and more difficult to provide small-scale rental housing.

Duplexes, fourplexes, small apartment buildings, and even rooming houses with shared kitchens and baths proliferated more freely in Minneapolis through much of the first three-quarters of the 20th century, despite many shameful racially discriminatory policies. Smaller rental properties still provide much of the city's reasonably priced housing, because hundreds of such buildings from bygone days were grandfathered in under the increasingly restrictive zoning codes.

Naturally, in our day we need a hip, scientific-sounding name for this old-fashioned phenomenon (complete with acronym). It lately has been dubbed "Naturally Occurring Affordable Housing" (NOAH) — simply meaning privately owned and unsubsidized rental housing within reach for many low- and moderate-income residents.

As it happens, I feel rather at home with the issue of such properties — if not with their trendy new moniker. I spent part of my childhood living in several such buildings in the Whittier and Lowry Hill East neighborhoods of south Minneapolis — and as a young adult I owned and was the live-in landlord of one.

Maybe in time everything old really is new again.

My parents were typical small-scale, part-time landlords of the 1950s and '60s, operating a miniature empire of fourplexes, triplexes and duplexes and renting out extra rooms in a large Victorian home we lived in for a time on Blaisdell Avenue. My father, a jack-of-all-trades (and master of several), did much of the conversion and maintenance work himself (pressing four-thumbed sons into service when absolutely necessary). Both Mom and Dad had been boarders in rooming houses when they first moved to Minneapolis in the 1940s, as my 94-year-old mother reminded me the other day when I told her about the proposed fourplex revival.

Forgive the nostalgic reverie. The point is that, before the city started forbidding it decades ago, the creation of various forms of NOAH was an organic process in Minneapolis.

Of course, new housing in high-demand neighborhoods, small-scale or large, is never particularly low-cost itself. But in what economists call the "filtering" process, it "creates" affordable housing by boosting the overall supply of available units, causing rents to fall in older buildings and less-sought-after areas.

Today's affordable-housing advocates sometimes disdain such "filtered" housing because living in neighborhoods and properties that have seen better days imposes disadvantages of many kinds. The ideal today is subsidized or mandated "inclusionary" housing, where affordable units are established side-by-side with new market-rate housing.

But imagining that all the disadvantages of being less than affluent can be wished away is, well, wishful. If there ever was going to be enough public and charitable funding to meet the lower-cost housing need by conjuring up low-rent housing in high-rent neighborhoods, we wouldn't have an affordable housing "crisis" today. It helps no one to effectively outlaw the process that develops the various kinds of housing people of modest means can actually afford.

Minneapolis is far from alone in having implemented land-use rules and other regulations that have inhibited the housing market. Many fast-growing metro areas where geography adds to the obstacles, especially on the coasts, have driven housing prices so notoriously high that economists increasingly blame housing costs for a historic reduction in American mobility, preventing workers from migrating to higher-productivity locales and thereby pinching economic growth while widening inequality.

The dysfunction is less in the housing marketplace than in the political marketplace of local governments. Homeowners have an inevitable incentive to look askance at the addition of more housing nearby. Their largest asset's value depends on how scarce property like theirs remains. And they also have oversized political clout, especially compared with potential future residents of a jurisdiction who would be the main direct beneficiaries of new housing development but have no voice. So the politics of expanding housing supply, of increasing densities, is always tough in thriving places, cities and suburbs alike.

(Even free-market-conservative homeowners sometimes lose their zeal for unfettered property rights when it comes to proposed development in their backyards.)

That said, concerns about crowding, traffic, parking, pollution, etc., are respectable reasons to be prudent and balanced in the pursuit of higher densities and a liberated housing market. Yet the lower costs and more humane scale of small-scale rental properties and other forms of diffused density (compared with the luxury apartment high-rises that are proliferating so wildly in Minneapolis partly because it's the main kind of new housing feasible under the zoning code) make fourplex freedom worth calm and careful consideration.

D.J. Tice is at Doug.Tice@startribune.com.