Minneapolis’ long-term housing strategy is under federal scrutiny after the Department of Housing and Urban Development opened a fair housing investigation into the city’s Minneapolis 2040 plan, the federal government announced Thursday.

HUD said it is examining whether elements of the plan violate Title VI of the Civil Rights Act of 1964 and the Fair Housing Act, which prohibit discrimination on the basis of race, color, or national origin in federally funded programs, The Daily Wire reported.

According to a HUD press release, officials are particularly concerned about language in the plan promoting the creation of “cultural districts,” defined as areas “where a significant portion of the population is comprised of people of color, Indigenous people, and or immigrant communities.”

The department said such language raises questions about whether the city is engaging in racial or ethnic preferences that could run afoul of federal law.

HUD also flagged provisions that appear to prioritize people of color and Indigenous residents for housing and homeownership programs, rather than basing eligibility strictly on income or need.

In a letter sent to Minneapolis Mayor Jacob Frey, HUD Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor cited specific passages from the city’s Community Planning and Economic Development department.

“For example, your Community Planning and Economic Development department will prioritize ‘rental housing for Black, Indigenous, People of Color and Immigrant communities’ by ‘leveraging [its] rental licensing authority,’” Trainor wrote. “That is not going to fly.”

Trainor warned that federal law does not permit housing access or enforcement decisions to be based on race or national origin, regardless of intent.

HUD Secretary Scott Turner said the investigation comes amid broader concerns about Minnesota’s handling of federally funded programs.

Turner noted that the state has been linked to multiple fraud investigations and criminal convictions tied to government assistance programs, adding that those controversies factored into Gov. Tim Walz’s decision not to seek a third term this November.

“Minnesota is ground zero for fraud and corruption because they have chosen to ignore the law to serve a cynical political agenda,” Turner said in a statement.

“This undermines our American values, united by a common heritage, language, and commitment to equal treatment under law,” he added.

Turner said HUD will not tolerate “illegal racial and ethnic preferences” that deny Americans equal protection under the law, regardless of how those policies are framed.

Trainor echoed those concerns, accusing state and local leaders of allowing ideology to override lawful governance.

He said Minnesotans are being “held captive to the riotous impulses of left-wing cultural arsonists,” and criticized Minneapolis leadership for what he described as repeated policy failures.

“Its largest city, Minneapolis, has fared no better under its clownish mayor, Jacob Frey, whose government may be engaging in unlawful discrimination by prioritizing Minneapolis residents for housing based on race and national origin rather than need,” Trainor wrote.

“The Trump Administration will ensure Minneapolis fully complies with the Fair Housing Act,” he added.

City officials pushed back against the investigation, calling it politically motivated and disconnected from the city’s housing record.

In a statement to The Daily Wire, a city spokesperson said Minneapolis is “proud of its record on housing” and described the city’s programs as inclusive and nationally recognized.

“In fact, we have award-winning affordable housing programs, and our work is a model for cities around the country,” the spokesperson said. “This investigation appears to be about politics, not affordable housing.”

The probe comes as the Trump administration has moved to tighten oversight of federal funding across a range of programs, including food assistance, housing subsidies, and Medicaid.

Federal officials have argued that stricter accountability measures are needed to prevent abuse and fraud.

Earlier this week, a federal judge temporarily blocked a pause on food stamp funding after Minnesota sued the federal government, though the underlying legal dispute remains ongoing, according to MinnPost.