By Kari Johnson & Kelly Law
Late Sunday night, the Minnesota Legislature adjourned the 2026 legislative session sine die. With a tied Minnesota House and a 1-seat majority in the Senate, expectations for major action were modest at best heading into the year, but lawmakers ultimately delivered several significant agreements on infrastructure, tax relief, housing, HCMC, and government oversight.
With every legislative seat on the ballot this November and a historic number of retirements, the outcomes of this year’s session will likely shape campaign conversations across Minnesota in the months ahead.
GOP Housing Chair, Rep. Spencer Igo, joins MCCD and our partners in support of affordable housing at Start with Home Rally (Photo Credit: Habitat MN)
Jeru Gobeze from Habitat for Humanity and Rep. Steve Elkins testifying in support of the Strengthen Minnesota Homes Bill
Yusra Mohamed with the Lake Street Council speaking at a press conference about the impact of the ICE surge on small businesses.
Housing
In a year defined by tight budgets and limited new spending, housing advocates and lawmakers secured a major bipartisan victory at the Minnesota Legislature.
The House and Senate reached agreement on a $165 million housing package (HF 1141/SF 203), delivering significant investments in affordable housing, homelessness prevention, workforce housing, and renter support across the state. For a non-budget year, the scale of the agreement is especially notable.
The package was designed to be “budget neutral,” relying on existing funding sources rather than new general fund spending. The bill combines Tyler Settlement funds and Minnesota Housing interest earnings to support a broad range of housing priorities.
The legislation has already been signed into law by Governor Walz.
What’s Included in the Housing Package:
$100 million for Housing Infrastructure Bonds (HIBs) – The largest piece of the package, which helps finance the construction and preservation of affordable housing statewide.
$40 million for Homelessness Prevention and Rental Assistance, from the Tyler Settlement funds to the Family Homeless Prevention and Assistance Program (FHPAP) to support rental and mortgage assistance.
$14.3 million for Greater Minnesota Workforce Housing Development Program, supporting housing production in communities struggling to attract workers due to limited housing supply.
$4 million toward Manufactured Home Park Infrastructure Grants, helping preserve and improve an important source of naturally occurring affordable housing across the state.
$425,000 for Capacity Building Grants supporting the statewide tenant hotline.
$150,000 for the Homebuyer Education, Counseling, and Training (HECAT) Program.
$150,000 for the MN Nice HomeShare Pilot Program, an initiative designed to connect homeowners with available space to people seeking affordable housing options.
The package reflects continued recognition that Minnesota’s housing challenges affect every part of the state. While many housing needs remain unmet, the 2026 session demonstrated that bipartisan cooperation on housing is still possible, even in a difficult budget environment.
Economic Development
While the housing omnibus bill received overwhelming bipartisan support, the jobs/workforce/economic development bill did not even pass. From the beginning of the legislative session, funding prospects looked slim as the House GOP remained adamant that any funding for small businesses would require an agreement for changes to paid family leave. This included small business relief and even supplemental funding for long-standing programs like the Small Business Assistance Partnerships program or the Emerging Entrepreneur Loan Program.
The House DFL remained steadfast in their position that they would not negotiate on changes to paid leave. This meant that our efforts to secure funding for both long-standing small business programs and small business relief faced an uphill climb from the start.
MCCD, in partnership with the Minnesota CDFI Coalition, led advocacy efforts and convened a small business coalition focused on securing funds to help small businesses that were financially impacted by the ICE surge. We built a strong advocacy team, comprised of MCCD members and community partners, that made small business relief a priority for House and Senate DFL lawmakers.
We worked with our bill authors, Senator Pha and Representative Cedric Fraizer to hold hearings that included emotional testimony from small business owners across Minnesota. We spoke with reporters, got Op-Eds published, held press conferences, multiple advocacy days and even a last-minute lunch for lawmakers, staff and others at the Capitol, spotlighting small businesses.
While lawmakers and advocates pushed until the final hours, the House did not have the votes to take up a $100 million small business recovery bill passed by bipartisan vote in the Senate.
This legislative failure reflects a lack of political will, not resources or effort. We are extremely thankful for all the hard work of all our members and partners, and we know they will continue to help as many small businesses as possible get through this tough time.
Insurance
Despite some late-session momentum, we were ultimately unable to secure any funding for the Strengthen Minnesota Homes program. The Commerce Committee passed a policy-only bill that didn’t include any appropriations. We are, however, extremely encouraged by the bipartisan support that the program received this year and look forward to picking this work back up next session during a budget year.
In addition to the Strengthen MN Homes program, we plan to introduce legislation to expand product offerings (multifamily commercial property insurance) at the Minnesota FAIR plan. We have a rough draft of the bill and will spend the interim making adjustments so that we have a bill ready to go on Tuesday, January 12, 2027. A new report that will help shape this work outlines how insurance is significantly impacting operating expenses for affordable housing providers. Read the report: “Insurance: The Hidden Market Force Threatening Affordable Housing”.
Thank you to our members!
We want to extend a sincere thank you to our members for showing up, testifying, and supporting this work. Your partnership and advocacy help amplify the importance of community development policies that strengthen neighborhoods, expand opportunities, and invest in the long-term well-being of communities across our state. Together, we are making sure local voices are heard and that community development remains a priority at the Capitol and beyond.
