Ramstad: On election's eve, housing is the big issue in fast-growing Rochester

ROCHESTER, MINN. — Olmsted County commissioners this summer took the extraordinary step of acting as their own developer for 10 smaller-than-usual houses, aiming to prove buyers would snag them in a city where housing demand is red hot.

They gave their contractor a tight timeline to finish the first two 1,100-square-foot homes; from final construction permit to an open house event yesterday took 84 days. They were also built on smaller lots to hold down costs.

"We specified that two of them had to be finished this fall and the remainder of them have to be finished next spring," said Gregory Wright, who is up for re-election next week after eight years as an Olmsted County commissioner. "The payoff is that we can show the community, builders, developers and the zoning commissions that this can work."

More housing is needed across Minnesota, but the issue dominates the scene in Rochester and surrounding Olmsted County.

"We had some forums with local business leaders," said April Sutor, a longtime human services executive who is challenging Wright for a seat on the board of commissioners. "And when we asked them what could local government do to help you, they didn't say, 'Lower my taxes.' They said, 'We need housing.'"

The reason is no surprise: Rochester is the second fastest-growing city in Minnesota since the 2020 census. It was outpaced on a percentage basis only by Mankato, which is less than half the size. I visited last week to get a sense of the political scene. I also visited the fastest-shrinking place in Minnesota and will write about it in my next column.

Across the country, a trend has been visible for several election cycles: Democrats prevail in growing places and Republicans in shrinking ones. Nationally, 53% of all counties lost population in the 2010s. In the 2020 election, Republican former President Donald Trump won 90% of them.

Voter sentiment in 81 of Minnesota's 87 counties shifted to the right in the 2022 election as more of the state's counties and towns tumbled from slow growth into decline. That shift had little effect on state policies, though, since DFLers in that election picked up a trifecta through the re-election of Gov. Tim Walz, a one-seat margin in the Senate and a six-seat majority in the House.

Rochester, dominated for decades by moderate Republicans, over the last 20 years grew quicker than most places in Minnesota. Along the way, it became increasingly Democratic. Its county and city officeholders don't affiliate with political parties, though one of the most contentious developments in City Council races this year involves the growing presence of Democratic-aligned progressive activists.

Rochester gained 7,000 jobs in the year that ended Sept. 30, or one out of six in the entire state. What's more, the city's workforce is larger than its population. Some estimates show that as many as 40,000 people commute into the city.

"When your population is growing as fast as ours, keeping up with the demand for public services is really challenging," said Sheila Kiscaden, who is ending three decades of public service to Olmsted County this fall, the last 12 years as a county commissioner after a long stint in the state Senate.

The force behind the growth is Mayo Clinic, which employs 42,000 in the city and this year began a $5 billion expansion that will include five new buildings by 2030. Mayo is the largest nonprofit organization in the state of Minnesota, and yet it's also the largest taxpayer in Olmsted County. Local assessors scrupulously comb through all its activities and tax its profit-making ones.

Mayo's expansion reflects both its ambition and the expected step-change in demand for health care as the huge baby boom generation encounters old age and end of life.

And it comes on the heels of the decade-long transformation of downtown Rochester, helped by state money and Mayo's, in a project known as Destination Medical Center. In August, a firm called United Therapeutics announced it would build a $100 million research center in Stewartville, about 10 miles south of Rochester.

The result is an atmosphere of abundance and speculation in Rochester and surrounding towns in Olmsted County, most noticeably in housing where supply is not able to keep up with demand.

Home prices in Rochester a decade ago were about 40% lower than in the Twin Cities. Today, they are nearly equal. Rochester recently changed its building code to make all types of construction easier, faster and more predictable. Even so, the city needs housing not just for health care workers but those in the lower-wage sectors of hospitality and construction.

The most closely watched race is for president of the Rochester City Council, an at-large position that has drawn council veteran Shaun Palmer, who spent 25 years as a city building inspector, against Randy Schubring, a community engagement executive at Mayo who was active in Minneapolis politics before moving to Rochester in 2008.

There's not much daylight between their views, though in separate conversations with them I gleaned slightly different ideas about the mix of housing construction. Palmer said he believes multifamily construction is on pace and more single-family homes are needed. Schubring thinks more "infill" construction is possible in the heart of the city.

"As Rochester rises, we have to make sure everybody rises," Schubring said. "We're in a manageable place as a medium-sized city, but we have to put in place the policies and infrastructure to ensure everyone has an opportunity to thrive."

Palmer described another way Mayo affects people in the city. Everyone in Rochester knows, he said, the city is filled with visitors coping with health challenges or those of a loved one.

"About once a week I'll be downtown and see someone going the wrong way on a one-way. You don't honk your horn at people because you don't know the news they just got," Palmer said. "That's an odd social thing, but it's one of those examples of compassion. That experience, that idea of service lies in the background here. It drives how you do things."