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Minneapolis Mayor Jacob Frey painted a picture of a city brimming with possibility at his annual State of the City address Tuesday. But he acknowledged that Minneapolis is still rebounding from the pandemic, and faces challenges including a big expected bump in the property tax levy to make up for high office building vacancy rates in downtown Minneapolis. 

“Achieving that possibility and realizing potential during a time of great transition is hard,” Frey said. “Realizing potential is not always a comfortable process, but we must lean into that discomfort all the same.” 

Frey also cited successes the city has had in building both affordable and deeply affordable housing and in implementing police reforms required by the court-enforced agreement with the Minnesota Department of Human Rights. 

Frey called for “optimism grounded in reality,” referring to the new more progressive majority that has taken power at the council this term and has sometimes clashed with the mayor.

He said the projected 6.1 percent increase in the property tax levy should be a wakeup call that the city should focus on existing spending rather than adding “shiny, new programs.” 

The city also will negotiate 12 union contracts with city workers next year, which Frey said would result in significant wage increases for more than 1,000 employees.

“We pride ourselves on being an inclusive and accessible city. We will neither be inclusive nor accessible by taxing people out of their homes,” Frey said. “I know, for some, property taxes have not been at the forefront of political discourse — that needs to change now.”

The mayor spoke from Northstar Center in downtown, which is in the process of a $200 million conversion from office space to more than 200 residential units. The conversion of downtown office spaces into residential units has been one area that mayors across the country are hoping will blunt the impact of high vacancy rates.  

Council President Elliott Payne said part of the council’s work this term will be aimed at ensuring that the property tax burden doesn’t fall disproportionately on poor and working people. 

“I also wanted to see us recognize and acknowledge the challenges that working people are facing, and how we can step up to be in a stronger position to help support them as well,” Payne said. 

Payne said he’d like to see a reassessment at the State Capitol of how government aid flows to cities in the new reality of remote working.  

During his speech, Frey joked about issues where he disagreed with the council, including a Minneapolis 

 that spurred rideshare companies to threaten to stop service in the city. He said policymakers can “debate and disagree,” but need to provide basic services like filling potholes. 

“I’ve learned over the last six years that in the offices we occupy, every day we have an opportunity to make life a little better for people,” Frey said. “Progress demands give-and-take.”

The mayor cited some victories for the city, including a 45 percent increase in the rates of visitors returning downtown, where the city leads the nation according to a recent study from the University of Toronto. He also said hotel demand was at its strongest level since 2019. 

Frey also emphasized successes the city has had in building both affordable and deeply affordable housing. He said the city has spent $363 million during his terms to boost affordable rental housing and homeownership and doubled the number of new affordable units. 

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Minneapolis Mayor Jacob Frey painted a picture of a city brimming with possibility at his annual State of the City address Tuesday. But he acknowledged that Minneapolis is still rebounding from the pandemic.

At State of the City address Minneapolis mayor optimistic, but tells council to curb spending

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