MINNEAPOLIS — An appeals court ruled Monday to lift an injunction on the Minneapolis 2040 Plan.

The 2040 Plan aims to provide all residents with access to affordable and quality housing by 2040, but environmental groups filed a lawsuit in 2018 arguing the plan may have severe unintended consequences on the environment. The core of the 2040 Plan eliminates single-family zoning in favor of developing more multi-family dwellings.

The case went back in front of a Hennepin County Court judge in June 2023. Last September, the judge ordered the city to revert to the 2030 Comprehensive Plan. The city argued it is noncompliant with state law and slows the process of building affordable, multi-unit housing.

On Monday, the appeals court concluded that the district court “clearly erred by finding that reversion to the 2030 Plan was necessary or appropriate to protect the environment, and abused its discretion in fashioning injunctive relief that imposes unnecessary hardship on the city.”

The Minneapolis City Council gave final approval to the 2040 plan in 2019, and the city began its implementation in 2020 before it was paused in 2022.

Since the implementation of the 2040 Plan, the city says it’s been able to build more than 250 affordable units that were not permitted under the 2030 Plan.

“While the Court’s reversal is a positive step, it does not end the litigation,” a spokesperson for the City of Minneapolis said. “It is critical that the State continue the path toward legislative clarification to ensure local jurisdictions across Minnesota, including Minneapolis, are able to move forward with much needed affordable housing projects, focus on undoing racial barriers and the crucial work to address the climate crisis without the threat of costly litigation.”

The spokesperson added that Minneapolis plans to resume permitting multifamily projects under the 2040 Plan.