Allen E. Hoppe, CFA, CTP, Director - Banking, Investments and Debt
Minneapolis, MN
Minneapolis, MN
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S&P Global Ratings assigned its 'AAA' rating to the City of Minneapolis' $123.59 million series 2024 general obligation (GO) bonds, based on the application of its "Methodology for Rating U.S. Governments," published Sept. 9, 2024. At the same time, S&P Global Ratings affirmed its 'AAA' rating on the city's GO debt outstanding. The outlook is stable.
"The 'AAA' rating reflects Minneapolis' highly productive economy and robust tax base, the willingness and ability to increase property taxes to match expenditures, and a management team that consistently has built reserves to a high level by responding to unexpected budgetary changes and forward planning," said S&P Global Ratings credit analyst Jessica Olejak.
The stable outlook reflects the continued stronger revenue recovery, economic growth even with some risks around commercial real estate, and a five-year plan that shows a measured use of reserves and stimulus funds but a return to structurally balanced operations in the next two years with reserves remaining above the fund balance policy.
We could lower the rating if the city draws down its general fund reserves more rapidly than planned, which we believe could signify unanticipated budgetary pressure and would leave less room for fiscal maneuvering in outyear budgets.
Fitch Ratings - Chicago - 18 Sep 2024: Fitch Ratings has assigned a 'AAA' rating to $123,590,000 of general obligation (GO) bonds series 2024 to be issued by the city of Minneapolis, MN.
Proceeds are being used to finance the construction of various assessable public projects, utility system improvements, and other capital projects. The bonds are expected to sell during the week of September 30.
In addition, Fitch has affirmed the 'AAA' ratings on the following city of Minneapolis, MN securities:
--Approximately $813.85 unlimited tax general obligation (ULTGO) bonds;
--Long-Term Issuer Default Rating (IDR).
The Rating Outlook is Stable.
Today Minneapolis Mayor Jacob Frey delivered his 2025 Budget Address in downtown Minneapolis in front of several Council Members, City leaders, and community partners. The mayor’s proposed budget addresses the increased cost of maintaining current City services while continuing to fund core programs, initiatives, and infrastructure important to Minneapolis residents.
In prepared remarks, Mayor Frey outlined his budget proposal which features investments for the City’s workforce, funding for the federal consent decree and state settlement agreement, and continued commitments towards the City’s nation-leading affordable housing work, sustainable climate action, downtown revitalization, and inclusive economic development.
The mayor’s proposed 2025 budget totals $1.88 billion with an 8.1% increase in the tax levy.
“What we are providing through this budget is a way through. We’re doubling down and investing in programs that work for the long haul, we’re ensuring our resources are used effectively, and we’re making sure our community will see the benefits,” said Mayor Frey.
“These investments are aligned with the values I’ve had since day one, and a difficult budgetary cycle doesn’t mute the core values guiding our shared work.,” Mayor Frey continued.
“Our planet demands work to reduce carbon output, and in Minneapolis we can take steps to deliver. People need the stability of a home, and in Minneapolis, we can continue leading the nation in providing affordable housing. Our streets need to be safe, and in Minneapolis, we can do both innovative and honest work to make that happen.”
Mayor Frey’s budget reflects a commitment to maximizing City resources. Inflation and significantly higher but necessary labor costs have increased the cost of delivering excellent City services. The spending down of American Rescue Plan Act (ARPA) funds and a reduced valuation of office buildings have shifted the impact of those costs to homeowners and renters through increased property taxes.
To address these realities without cutting essential city services, the City has:
Multiple other levies factor into the City's overall property tax levy, including independent boards like the Minneapolis Park and Recreation Board, the Municipal Building Commission, and the Minneapolis Public Housing Authority.
The City of Minneapolis' 'AAA' IDR and GO ratings reflect the city's 'aaa' financial resilience given a 'high midrange' level of budgetary flexibility and Fitch's expectations that general fund reserves will be maintained at or above 10% of spending and transfers out. The ratings also incorporate 'strong' demographic level metrics driven by high levels of educational attainment and a history of relatively low unemployment rates and a 'midrange' long-term liability composite. The ratings also reflect the application of a +1 notch additional analytical factor for economic and institutional strength due to the city's role as a vital component of the Minneapolis-St. Paul-Bloomington metropolitan statistical area (MSA), which contributes 1.4% to U.S. GDP.
--Sustained declines in financial resilience leading to general fund reserves falling to below 10% of spending and transfers out;
--Marked deterioration of demographic and economic metrics;
--Material increase in long-term liabilities assuming current levels of personal income, governmental revenues and spending.
--Not applicable given the 'AAA' ratings.
The bonds are general obligations of the city, backed by the city's full faith and credit and unlimited ad valorem taxing power. To pay debt service, the city is obligated to levy a tax without limit as to rate or amount on all taxable property within the city.
The Local Government Rating Model generates Model Implied Ratings which communicate the issuer's credit quality relative to Fitch's local government rating portfolio (the Model Implied Rating will be the IDR except in certain circumstances explained in the applicable criteria). The Model Implied Rating is expressed via a numerical value calibrated to Fitch's long-term rating scale that ranges from 10.0 or higher ('AAA'), 9.0 ('AA+'), 8.0 ('AA'), and so forth down to 1.0 ('BBB-' and below).
Model Implied Ratings reflect the combination of issuer-specific metrics and assessments to generate a Metric Profile, and a structured framework to account for Additional Analytical Factors not captured in the Metric Profile that can either mitigate or exacerbate credit risks. Additional Analytical Factors are reflected in notching from the Metric Profile and are capped at +/-3 notches.
Minneapolis Model Implied Rating: 'AAA' (Numerical Value: 11.27)
-- Metric Profile: 'AAA' (Numerical Value: 10.27)
-- Net Additional Analytical Factor Notching: +1.0
Individual Additional Analytical Notching Factors:
-- Economic and Institutional Strength: +1.0
Minneapolis' Model Implied Rating is 'AAA'. The associated numerical value of 11.27 is at the upper end of the range for its current 'AAA' rating.
Minneapolis' financial resilience is driven by the combination of its 'High' revenue control assessment and 'Midrange' expenditure control assessment, culminating in a 'High Midrange' budgetary flexibility assessment.
-- Revenue control assessment: High
-- Expenditure control assessment: Midrange
-- Budgetary flexibility assessment: High Midrange
-- Minimum fund balance for current financial resilience assessment: >=10.0%
-- Current year fund balance to expenditure ratio: 30.9% (2022)
-- Five-year low fund balance to expenditure ratio: 20.7% (2022)
Revenue Volatility - 'Strongest'
Minneapolis' weakest historic three-year revenue performance is neutral to the Model Implied Rating.
The revenue volatility metric is an estimate of potential revenue volatility based on the issuer's historical experience relative to the median for the Fitch-rated local government portfolio. The metric helps to differentiate issuers by the scale of revenue loss that would have to be addressed through revenue raising, cost controls or utilization of reserves through economic cycles.
-- Lowest three-year revenue performance (based on revenues dating back to 2005): 3.0% increase for the three-year period ending fiscal 2015
-- Median issuer decline: -4.7% (2022)
Population Trend - 'Midrange'
Based on the median of 10-year annual percentage change in population, Minneapolis' population trend is assessed as 'Midrange'.
Population trend: 1.0% Analyst Input (53rd percentile) (vs. 1.0% 2021 median of 10-year annual percentage change in population)
Unemployment, Educational Attainment and MHI Level - 'Strong'
The overall strength of Minneapolis' demographic and economic level indicators (unemployment rate, educational attainment, median household income [MHI]) in 2022 are assessed as 'Strong' on a composite basis, performing at the 74th percentile of Fitch's local government rating portfolio. This is due to very high education attainment levels and very low unemployment rate offsetting midrange median-issuer indexed adjusted MHI.
-- Unemployment rate as a percentage of national rate: 75.0% Analyst Input (83rd percentile) (vs. 69.4% 2022), relative to the national rate of 3.6%
-- Percent of population with a bachelor's degree or higher: 53.5% Analyst Input (91st percentile) (vs. 52.6% 2021 Actual)
-- MHI as a percent of the portfolio median: 97.9% Analyst Input (47th percentile) (vs. 98.1% 2021 Actual)
Economic Concentration and Population Size - 'Strongest'
Minneapolis' population in 2021 was of sufficient size and the economy was sufficiently diversified to qualify for Fitch's highest overall size/diversification category.
The composite metric acts asymmetrically, with most issuers (above the 15th percentile for each metric) sufficiently diversified to minimize risks associated with small population and economic concentration. Downward effects of the metric on the Metric Profile are most pronounced for the least economically diverse issuers (in the 5th percentile for the metric or lower). The economic concentration percentage shown below is defined as the sum of the absolute deviation of the percentage of personal income by major economic sectors relative to the U.S. distribution.
-- Population size: 422,003 Analyst Input (above the 15th percentile) (vs. 427,806 2021 Actual)
-- Economic concentration: 32.2% Analyst Input (above the 15th percentile) (vs. 32.8% 2022 Actual)
Demographic and Economic Strength Additional Analytical Factors and Notching: +1.0 notch (for Economic and Institutional Strength)
Minneapolis is a vital component of the Minneapolis-St. Paul-Bloomington MSA, the 15th largest MSA in the country in terms of GDP contribution at 1.4% of U.S. GDP as of 2022. The city is home to several large corporation headquarters and is an important contributor to the MSA which had job levels of approximately 2 million in May 2024, according to the Bureau of Labor Statistics.
The most recently available data was used for demographic and economic metrics.
Long-Term Liability Burden - 'Midrange'
Minneapolis' liabilities to governmental revenue remain strong while carrying costs to governmental expenditures and liabilities to personal income remain midrange. The long-term liability composite metric in 2022 is at the 58th percentile, roughly in line with Fitch's local government rating portfolio.
-- Liabilities to personal income: 4.5% Analyst Input (58th percentile) (vs. 4.9% 2022 Actual)
-- Liabilities to governmental revenue: 155.8% Analyst Input (61st percentile) (vs. 168.4% 2022 Actual)
-- Carrying costs to governmental expenditures: 14.0% (2022) (56th percentile)
Direct debt was adjusted with debt issued and amortized since the most recently available audit (2022).
Analyst inputs reflect new debt issued and debt amortized in fiscal 2023.
Minneapolis is the largest city in the state of Minnesota. Population growth has been strong as educated, younger workers have been attracted to the diverse employment opportunities in the city, as well as to the city's amenities and cultural attractions and easy commutability. Along with its sister city of St. Paul, Minneapolis forms the core for the second-largest economic center in the U.S. Midwest, after Chicago.
The city's broad and diverse economic base benefits from major employers in the stable health care, higher education and state and county government sectors. Minneapolis's economy is very diverse. Major employers include entities in health care, banking, higher education and the retail trade. The city also includes a significant public-sector sector given the proximity of the state government.
The five largest employers in the city are the University of Minnesota (17,691), Allina Health (10,856), Target Corporation (8,500), the Hennepin Health Care (7,111) and Wells Fargo Bank (7,000).
On Friday, Mayor Frey and Council Member Katie Cashman were joined by City leadership to celebrate the City’s 100th electric vehicle going into service. The Minneapolis Public Works Department is driving an ambitious Green Fleets policy geared toward creating a zero-emission fleet. This initiative is just one part of the Climate Equity Plan, which is the City’s plan to reach its accelerated, equitable, and aggressive climate goals over the next ten years.
“Climate change is an undeniable fact, and it’s on us to urgently address it,” said Mayor Jacob Frey. “Today’s launch of our fleet’s 100th electric vehicle marks a significant milestone on our path to becoming a carbon-neutral city. This initiative—along with our other Climate Legacy Initiative projects—is an investment in our environment, an investment in the health of our residents, an investment in sustainability, and, most importantly, it’s an investment in the future of Minneapolis. We are not just talking about change; we are making it happen.”
"Minneapolis is nationally recognized for its natural amenities. We’ve made it our mission to protect that reputation and take climate action through our city’s operations," said Margaret Anderson Kelliher, City Operations Officer. "I’m so proud to mark this milestone for our staff and for the residents they serve. By continuing to electrify our fleet, we’re investing in a more durable, sustainable future not just for our planet but our workforce.”
The City’s commitment to converting its fleet to all electric vehicles will continue to ramp up in the second half of 2024. While 100 electric vehicles are now operating on city streets, 41 additional vehicles have been delivered and are being outfitted for service with 11 more on order. In addition, 49 fleet charging stations have been installed across city operations with another 43 scheduled to be installed this year.
The City’s new Climate Equity Plan, provides a roadmap for climate work over the next decade, including initiatives like the City’s all-electric fleet. The Plan is funding by the mayor’s Climate Legacy Initiative. Beginning with Mayor Frey’s 2024 budget, $10 million will be invested each year to the CLI, which triples previous climate work investments. The community-wide plan sets a goal to significantly reduce climate pollution by 2030 and become carbon neutral by 2050. It also envisions action to weatherize all homes, reduce utility bills, promote green job training, and plant more trees.
“As a Council Member, I hear about the need for strong climate action and investments in our resilience and our future. But I also hear from constituents about day-to-day noise pollution, whether it’s from speeding cars on the parkways around the lakes, honking traffic on i-94 or even their neighbors’ leaf blowers in the fall,” said Minneapolis Council Member Katie Cashman, who represents ward seven and is chair of the Climate & Infrastructure committee. “Electrifying our city vehicles is not just about air pollution reduction, it’s also about noise pollution reduction and making our city more pleasant and livable."
Air pollution is linked to increased rates of cancer, heart and lung disease, asthma and allergies. Carbon dioxide pollution, a greenhouse gas, causes climate change. Cars and trucks are the largest contributor of air pollution within Minneapolis and are a significant source of greenhouse gases.
“Today, we are a part of one of the many incredible stories going on across this city,” said Patrick Hanlon, Minneapolis Health Department Deputy Commissioner of Sustainability, Healthy Homes and Environment. “We started with a few projects scattered across the city, and we are now investing in hundreds of clean energy projects each year that are saving people money and improving our environmental quality. As environmental and public health professionals, it feels good to work in a city that reinvests in its community in this space.”
The trophy case at the City of Minneapolis is filling up, thanks to national recognition for an array of features that make the City of Lakes a destination for visitors and a source of pride for residents.
Recent recognitions include:
“Minneapolis is cruising into the summer and racking up some major wins,” said Mayor Jacob Frey. “While we all know our parks are special, our arts scene is unique, and our people are happy, seeing Minneapolis top all these national lists puts a serious hop in our collective step. Our city is on a roll, and we all have to lean into the positive accolades to keep the momentum going.”
The destination feel of the city was in full force this past weekend, when hundreds of thousands of people descended on downtown for “Gymnastics City USA” and Pride events. City teams report all events were safe and successful because of increased traffic control and true collaboration between city teams and downtown businesses.
Nicollet Mall was transformed into Promenade du Nord, an ode to all things Paris where athletes will compete in the Summer Games. As part of a citywide effort to revitalize downtown, city leaders are exploring the conversion of Nicollet Mall into a pedestrian only zone, along with options for directing transit service elsewhere through downtown.
The bustle will continue as Minneapolis hosts the Taste of Minnesota this weekend and Aquatennial celebrations July 24-July 27.
For the second year in a row, Minneapolis is ranked number one in biking out of 2,300 cities in the U.S. in the PeopleForBikes’ seventh annual City Ratings, in addition to having one of the best new U.S. bike lanes of 2023. The city’s neighbor, St. Paul, ranked fourth. Cities are measured by the quality and connectivity of its bike network based on safe speeds, protected bike lanes, reallocated road space, intersection safety, network connections and trusted data. Minneapolis boasts 25 miles of on-street protected bikeways and 111 miles of off-street bikeways and trails for residents and visitors to enjoy. In fact, to keep up with demand, the City of Minneapolis is even hiring a bike coordinator.
“Biking is one of the most popular ways people get around the city, and we couldn’t be prouder of this distinction – for two years running,” said Jenifer Hager, director of transportation planning & programming for the City of Minneapolis. “Our bike share program and trail systems are some of the best in the country. Pedaling through Minneapolis is a great way to see the city and spend the day.”
On Tuesday, Mayor Jacob Frey, Council Member Aurin Chowdhury, State legislators, labor leaders, developers, housing and environmental advocates applauded legislation passed during the 2024 legislative session allowing the City of Minneapolis to resume housing development under the Minneapolis 2040 Comprehensive Plan. After being stuck in a years-long court battle, state lawmakers passed a bill that resolved the legal challenge under the 2040 Plan that gave rise to the lawsuit. The legislation allows the City of Minneapolis to move forward with permitting long-stalled multi-unit housing projects.
“Minneapolis’ nation-leading affordable housing work has been made possible in large part due to the 2040 Plan – and thanks to our state lawmakers, we get to keep that historic work going,” said Mayor Frey. “The 2040 Plan has always been about more than development; it’s a testament to our City’s commitment to having diverse housing options in every neighborhood, equitable growth, and the dismantling of generations of intentional segregation. Our partners at the legislature found a fix to protect this plan – and every neighborhood in Minneapolis will benefit because of it.”
“The Minneapolis 2040 Plan is a landmark accomplishment that set an example for the rest of the country,” said State Senator Omar Fateh. “By legalizing triplexes and allowing more Transit Oriented Development, Minneapolis has led the way on housing affordability, climate action, and reversing the racist legacy of exclusionary zoning. We should not allow our state's environmental laws to be abused to halt progress like that, so I was proud to be the lead Senate author on the bill to protect our environmental laws from that type of misuse.”
“I was proud to author the comprehensive plan clarification bill to ensure much-needed housing development can move forward, while also ensuring that appropriate environmental review and protections remain in place. Housing density and environmental review can and should exist together to achieve our affordable housing and environmental goals at the same time, and this bill ensures that they do,” said State Representative Sydney Jordan.
“Resolving the Minneapolis 2040 lawsuit once-and-for-all will allow Minneapolis and other cities to move forward with their vision for a future that is both pro-housing and pro-environment. In doing so we will create more affordable homes that are desperately needed, a vital step forward in our state’s work to address our housing crisis. Only through innovation and an all-hands-on-deck approach at all levels of government will we meet this moment,” said State Representative Mike Howard.
The Minneapolis 2040 Comprehensive Plan was passed in 2019 and was the guiding vision for shaping how the city will grow and change for the next 20 years. This includes historic zoning reforms to allow for a diversity of use in all neighborhoods across the city.
“In the four plus years since the Minneapolis 2040 plan has been in place, we are seeing that bold land use policies intended to address our city’s housing shortage are working to produce more housing choices in more neighborhoods. The City is increasing housing supply while growing in a sustainable way that protects the environment through implementation of Minneapolis 2040, along with other comprehensive policy documents like the Climate Equity Action Plan and the Transportation Action Plan,” said City Planning Director Meg McMahan.
In part due to the 2040 Plan, Minneapolis has seen record-breaking levels of affordable rental housing units produced in the past several years, while also keeping rents at some of the lowest rates in the country.
Since 2018, Mayor Frey and the City of Minneapolis have invested more than $360 million into affordable rental housing and homeownership programs.
Speech highlighted transformational work being done through the arts and vibrant storefronts, investment in City workforce and cross-departmental collaborations, upcoming community safety center, commitment to police reform, and a 2025 budget forecast
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Today, Mayor Jacob Frey delivered his 2024 State of the City Address at the NorthStar Center in downtown Minneapolis – the site of the first, recent commercial-to-residential housing conversion project. The mayor gave his remarks in person to state and local elected officials, Minneapolis City Council members, City of Minneapolis leadership and staff, community partners, and members of the press.
The address focused on Minneapolis brimming with possibility and leaning into change during this transformational time. The mayor highlighted the city’s record-setting affordable housing production over the past six years, current arts and vibrant storefronts work to revitalize downtown, the Southside Community Safety Center, police reform, the importance of our City workforce, and a high-level forecast of the budgeting process for 2025.
“By the numbers, the acceleration of our recovery and the pace of change continues. We are leading the nation in the rate of visitor return to downtown with activity up by 45% in the past year,” said Frey.
“Meet Minneapolis announced that 2023 was the strongest year for hotel room demand since 2019. Zillow recently ranked Minneapolis as a top city for first-time homebuyers. That’s right. Anyone looking for a great new home, in a great new city… they should look no further than right here.”
Frey continued, “Achieving that possibility and realizing potential during a time of great transition is hard. And realizing potential is not always a comfortable process, but we must lean into that discomfort all the same. So, the state of our city is brimming with possibility and leaning in to change.”
Since Mayor Frey took office in 2018, affordable housing has remained a top priority, and our housing team in CPED has been leading the charge. The mayor and City have invested a total of $363 million into affordable rental housing and homeownership programs in the past six years.
Between 2018 and 2024, the City has produced 4,679 total units of affordable housing – an average of 780 total units each year. That’s more than double the average between 2011 and 2017. The City has also been prioritizing deeply affordable rental housing at 30% AMI or lower, producing deeply affordable units at nearly 8.5 times the previous rate on average over the past six years. Recently, the mayor and the City have also:
Commissioner Barnette is leading a team to bring the Southside Community Safety Center to fruition by next year, and our communities are shaping this vision alongside our city team. To date, the Office of Community Safety (OCS) has met with community members during more than 15 engagement sessions – and is collecting feedback directly from those who will be most impacted, our Third Precinct residents.
OCS is also acting on the recommendations coming out of the Minneapolis Safe and Thriving Communities Report. This report serves to launch our community safety design and implementation work – helping OCS coordinate our safety departments to address prevention, response, and restoration.
And finally, the City is carrying out the necessary work of police reform. Both through a settlement agreement with the state and an eventual federal consent decree. We are changing the way policing is done in the United States. Chief O’Hara and his leadership team are committed to these reforms and strengthening community-police relations – and City Attorney Kristyn Anderson and the entire 34-person implementation unit is committed to upholding compliance and seeing this thing through to the end.
Recognizing that art is a lynchpin for so much in Minneapolis, Mayor Frey created the Department of Arts & Cultural Affairs last year, and now they are embarking on a beautiful plan for transition across the city.
Got a bland, vanilla, underutilized storefront? Give it to an artist. Let them shape an outcome that is dynamic and transformative. That’s exactly what Director Ben Johnson and his team are doing. Changing vacant storefronts to must-see destinations.
Through deliberate recruitment efforts by staff across our enterprise, great leadership from City Operations Officer Margaret Anderson Kelliher, Department Directors, and a brilliant HR strategy execution from our HR Director Nikki Odom, the City is getting new hires in the door quicker, increasing employee diversity, and welcoming and retaining some serious talent as well.
Compared to last year, applications to the City of Minneapolis have gone up 101%, time to fill jobs has decreased 26%, and the diverse team we are forming is serving our city with passion and skill. In the first quarter of 2024, we are up 56% in our Hispanic/Latino hires, up 55% in our Native American hires, up 15% in our Asian hires, and up 8% in our Black/African American hires.
And, this past year, the City has also been recognized as an “Age Friendly Employer” by the Age Friendly Institute and as a “Most LGBTQ+ Friendly Employer” by Diversity for Social Impact.
These aren’t just awards. These recognitions coupled with the new hiring data show the deep investment we have made – and continue to make – in our City workforce.
Coming into this year’s budgeting process, the City is starting at a projected levy increase of 6.1%. Anything we add to the budget will only increase the levy. And at the very least, the City has 12 union contracts up for renewal next year where we expect to see significant wage increases for over 1,000 City employees.
“The reality of everything I have said so far in this speech, every statistic I provided and number one ranking I bragged about is true. It’s also true that our world has changed. And changing with it will, at times, be uncertain. Even uncomfortable,” said Frey.
Frey continued, “Here’s the reality: budgeting will look different this year. This is not the year to add new, shiny programs. It’s the year to effectively carry out the ones we have.”
The big factor – downtown valuation. With fewer taxes collected from downtown buildings, the money has to come from somewhere. So, that burden of a regressive tax shifts to residents – both homeowners and renters, disproportionately impacting our low-income residents and seniors.
“Reality doesn’t wait for theory to catch up. Minneapolis residents expect much of their local government – most importantly, results. And in Minneapolis, we achieve our possibility by saying “we do” and “we can.”
Changes city leaders and advocates have sought for generations are arriving today.
We CAN knock down the K-Mart, breathing new life into a corridor. We CAN put up eight and a half times the amount of deeply affordable housing. We CAN convert buildings from commercial to residential… make Nicollet Mall a pedestrian space … and achieve permanent implementation of the 2040 plan… We CAN.
Our city is brimming with possibility… and we all make up that team to ensure it’s realized.” –Mayor Frey, State of the City 2024
The mayor’s full State of the City remarks as prepared may be found here.
Minneapolis recently saw the largest year-over-year increase in downtown visitors, according to a new study examining the recovery of major North American cities.
A new cell phone activity study from the University of Toronto's School of Cities found Minneapolis experienced a 45.3% increase in visits to downtown when comparing February 2024 to March 2023.
The increase in visitors to Minneapolis represented the largest jump documented in the study, which examined 64 major cities in the United States and Canada.
While 50 of the downtowns studied showed an upward trajectory, Minneapolis, Montreal, Ottawa, Chicago, Louisville, Pittsburgh, Cincinnati, Boston, Washington DC, and Toronto showed the strongest signs of recovery.
The Minneapolis data shows a significant increase in visitors in the months of June and July of 2023.
Notable events during this time included Taylor Swift's two concerts at the U.S. Bank Stadium, the Twin Cities Pride Festival and the Kiwanis International Convention, which contributed to record-breaking hotel bookings.
While the study did not extend to March 2024, the Big Ten women's basketball tournament held last month also brought a substantial boost to downtown Minneapolis.
Explore the entire Recovery Trends study here.
It marks a major improvement for Minneapolis, which initially struggled to recover from the COVID-19 downturn, and was ranked 64th out of 66 in North America for downtown recovery as recently as October.
The City Council has approved $16.8 million in direct investment and $1.5 million in 10-year federal tax credits to create or preserve 876 units of affordable multifamily rental housing in nine projects located throughout the city.
These investments are the result of awards from the City’s Affordable Housing Trust Fund (AHTF) and Federal Low Income Housing Tax Credit programs for 2023. Together, these investments will leverage over $341.4 million in private and public resources.
“Minneapolis has been leading the nation in our affordable housing production – and the Affordable Housing Trust Fund is a big part of that body of work,” said Mayor Frey. “We know when people have a roof over their head and a safe, stable place to call home, it benefits their mental, physical, and emotional well-being, and that is why this fund is so important. People need access to affordable housing, and we’re giving them that. Thank you to our housing team in the Community Planning and Economic Development department for their partnership and ongoing work to further our affordable housing goals.”
The AHTF creates new and preserves existing affordable housing for low-income renters with incomes at or below 50% AMI ($62,100 per year for a family of four). Almost 75% of renters experience cost burdens (pay more than 30% of their income for housing) because of the affordable housing shortage in the city. Black, Indigenous and People of Color are disproportionately impacted by housing instability.
“The City’s $18.3 million commitment towards affordable housing will leverage more than $18 dollars of additional funding for every dollar the City invests,” said Council Member Lisa Goodman, Chair, Business, Inspections, Housing, and Zoning Committee. “This allocation will assist in building over 876 affordable homes in Minneapolis, a third of which are deeply affordable (up to 30% AMI). This large number of affordable homes being built or preserved is consistent with our adopted goals and is more than most other metro cities combined.”
The AHTF program and the Federal Low Income Housing Tax Credit (HTC) program provide up front equity and gap financing to assist with the production and preservation of decent, safe, and affordable multifamily rental housing.
The City Council approved the following project on Thursday, Dec. 7 for a preliminary reservation of HTCs totaling nearly $1.5 million:
These tax credits will generate over $14.5 million in up front equity for this project.
The City Council also approved just over $16.8 million from the AHTF for the following projects:
In Ward 12, $1,000,000 for the Cheatham Apartments project which is a mixed income building providing deep affordability to large family units including 32 units with secured rental assistance and 20 units restricted for homelessness.
In Wards 8, 9, 10, $1,365,000 for The Northview project which is a scattered site project that preserves large family units with deep affordability and secured rental assistance for 22 units as well as 20 units restricted for homelessness.
In Ward 8, $2,260,000 for The LOMA project which is a 100% affordable senior housing mixed-use project that includes a large number of three bedrooms units for inter-generational living with secured rental assistance for 31 units and 15 units restricted for homelessness.
In Ward 10, an additional $1,000,000 for the 1301 Lake Street project which is a mixed-use building with affordable family housing and 24 units set aside for homelessness.
In Ward 6, $1,350,000 for the Portland Village Rehabilitation project which is preservation of large family housing with deep affordability and 20 units restricted to homelessness. All units have rental assistance except for the caretaker unit.
In Ward 9, an additional $2,500,000 for the Little Earth Rehab project which is rehabilitation and preservation of 212 deeply affordable family housing units including 88 three-bedroom units and 18 four-bedroom units.
In Ward 7, $2,019,427 for the St. Olaf Exodus Building project which is a rehabilitation and new construction project that creates 66 units of permanent supportive housing for people experiencing homelessness or at risk of homelessness.
In Ward 4, 178 units, an additional $3,500,000 for the Upper Harbor Terminal Parcel 6A project which consists of deeply affordable housing including family units and 10 units reserved for homelessness. This project is the first phase of a City priority development site and is a mixed-use project.
In Ward 6, 83 units, $1,900,00 for the NACC Housing project which is a mixed-use project that provides supportive housing including 11 units restricted for homelessness, large family units, and an expanded clinic facility on-site.
In Mayor Frey’s 2024 approved City budget, there will be $18 million more invested into the AHTF.
The City of Minneapolis has awarded the first round of funding for the new, historic climate action work through the Minneapolis Climate Legacy Initiative (CLI). The CLI is Mayor Frey’s innovative plan to fund the City’s accelerated, equitable, and aggressive climate goals over the next ten years. Through the CLI, Minneapolis is poised to become one of the most sustainable cities in the nation.
Mayor Frey announced the creation of the CLI in July after working with various community leaders, grassroots advocates, unions and climate organizations, and City staff. Last Thursday, the City officially opened up contracts with more than 20 community organizations, allowing them to get funding and services through the CLI in areas of the city that need it most.
“You can’t put a price on saving our planet – but the Climate Legacy Initiative triples our investment in climate work and paves the way for important climate initiatives across Minneapolis,” Mayor Jacob Frey said. “With this funding, we’re committing to years of ongoing initiatives to protect our planet and future generations. I am excited to see the first round of funding go out to incredible organizations that are partnering with us in this work, and I want to thank my Council colleagues who authored and co-authored this important Initiative: Council President Jenkins, Council Vice President Palmisano, Council Member Goodman, Council Member Chughtai."
The CLI provides necessary funding to implement the City’s Climate Equity Plan, which provides a roadmap for climate work over the next decade. The community-wide plan sets a goal for Minneapolis to significantly reduce climate pollution by 2030 and become carbon neutral by 2050. It also includes plans to weatherize all homes, reduce utility bills, promote green job training, and plant more trees.
Beginning with Mayor Frey’s 2024 budget, $10 million will be invested each year to the CLI, which triples previous climate work investments. These funds are in addition to current climate funding.
“We’re committed to reducing the impact of climate change in our city and doing our part locally in this global crisis,” said Health Commissioner Damōn Chaplin. “Through the Climate Legacy Initiative, we’ll provide community members with financial assistance to install more energy-efficient systems, insulate and weatherize homes, add solar energy, and plant more trees. Providing these services keeps Minneapolis on the leading edge for reducing greenhouse gases and reaching city carbon neutrality by 2050.”
"The Climate Legacy Initiative creates potential to reduce carbon emissions while increasing energy affordability, specifically among Minneapolis residents who haven't historically had the means to invest in such improvements,” said Chris Duffrin, President of Center for Energy and Environment. “In partnership with this initiative, we are excited to continue helping the city's residents to strengthen their homes' efficiency through weatherization and cleaner, more efficient heating systems."
“It’s been a privilege to work with the City of Minneapolis as they set out to achieve the City’s accelerated, equitable climate action goals,” said Gustavo Sandoval, Senior Project Manager at Elevate. “We look forward to not only helping them achieve their goals but also inspiring other Midwest cities in the process. The City has served as a national leader in climate innovation, we congratulate them on serving their community and being an inspiration to the region. We look forward to working together.”
“Frontier Energy is grateful for the opportunity to partner with the City of Minneapolis to achieve greater energy efficiency and sustainability for Minneapolis businesses and residents. The City’s funding will help enable the intelligent use of energy today for a more resilient tomorrow,” said Frontier Energy.
Funding for the CLI will be raised via gas and electric utility franchise fees. For the typical Minneapolis household, the franchise fee increase will cost an additional $12 a year, or $1 a month, on average. This funding will go directly back to the ratepayers to lower energy bills, make energy efficiency improvements, and more.
Complete funding for the CLI and Climate Equity Plan will come from a variety of sources, including federal IIJA and IRA funds, state dispersion of federal funds and 2023 legislation, utility conservation and renewable energy incentives, and city revenue tools.
