On March 25, 2020, Minnesota Governor Tim Walz issued Emergency Executive Order 20-20 in response to the continuing COVID-19 pandemic. The Order generally requires Minnesota citizens to remain in their homes for at least two weeks beginning on Friday, March 27, 2020 through April 10, 2020, but provides exceptions for certain personal activities and for those persons who are engaged in certain critical business and governmental activities and cannot perform such work remotely from home.

Although a “stay at home” order has been expected for over a week, there has been widespread industry concern that such an order could severely limit or temporarily halt the production of affordable housing within Minnesota, which would further exacerbate the state’s affordable housing shortage crisis. Thankfully though, the Order exempts nearly all types of governmental and business activities necessary for new and continuing construction of affordable housing, including the following:

  • Construction / trade workers such as electricians, plumbers, and other related construction workers.
  • State and local agencies engaged in financing, governing and otherwise supporting affordable housing.
  • Banks other financial institutions.
  • Workers supporting building code enforcement and construction matters.
  • Other businesses that assist in facilitating and financing real estate transactions, including appraisers and title companies.

The operation of existing affordable housing projects should not be significantly impacted either. The Order excludes those involved with on-site property management, supportive services, repairs and maintenance, laundry, and security services for housing projects. It also excludes state and local governmental workers who provide financial and operational support for affordable housing projects.

Indeed, the Order does not appear to prohibit any parties who are critical to the production or operation of affordable housing from doing so, but it is important to note that local governments, labor unions, and/or specific businesses may choose to follow more restrictive “stay at home” rules out of an abundance of caution that could impact projects in particular geographic areas and/or involving particular business partners. Additionally, it goes without saying that developers should anticipate delays in the closing and construction processes due to staffing shortages. We are also monitoring potential industry trends (e.g. equity pricing, debt financing terms, underwriting requirements, etc.) that could impact our developer clients, but thankfully, to date, we are not aware of any that could adversely impact affordable housing projects.

Winthrop & Weinstine, P.A. will continue to monitor relevant issues in light of this pandemic. Should you wish to discuss any of the topics addressed above or other questions your organization may have as a result of the current environment, please feel free to contact any of the attorneys in Winthrop & Weinstine, P.A.’s real estate development and finance practice group.

March 26, 2020