4d Affordable Housing Incentive Program
Minneapolis’s 4d program preserves affordable homes in Minneapolis by helping apartment building owners obtain property tax reductions if they agree to keep 20% or more of their rental units affordable. The program also helps owners make existing buildings greener through cost sharing for energy efficiency improvements and solar installations.
- 4d Affordable Housing Incentive Program Guide (PDF)
- Watch a video about the program or view a presentation about the program
- Frequently Asked Questions (FAQs), compiled by the Family Housing Fund
What is affordable housing?
- Rent is affordable to households making less than 60% of Area Median Income (AMI). Maximum rents for 2019-2020 are as follows:
- Studio/Efficiency $1,050
- 1 Bedroom $1,125
- 2 Bedrooms $1,350
- 3 Bedrooms $1,560
- 4 Bedrooms $1,740
- 5 Bedrooms $1,920
- As units turn over, affordable units are rented to households making less than 60% of AMI. In 2019, this means that units must be rented to households making less than the following amounts: $42,000 for one person; $48,000 for two people; $54,000 for three people; $60,000 for 4 people; $64,800 for 5 people.
Benefits for Property Owners
- 10-year eligibility for 4d property tax rate, which provides a 40% tax rate reduction on qualifying units.
Note: The first tier of valuation ($150,000/unit in 2019) on 4d rental properties is taxed at a rate 40% less than 4a and 4b rental property. The actual reduction in property taxes may be slightly higher or lower than 40%.
- Grant to each 4d property, in the amount of $100 per affordable unit, capped at
$1,000 per property
- Payment of first year application fee to the State of Minnesota for Low Income Rental Classification (LIRC) (doc), also known as 4d tax classification ($10/unit)
- Free or low cost energy efficiency and healthy homes assessments offered
- Green Housing and healthy homes cost share funding that can cover 90% of qualified upgrades identified in energy or health and safety assessments. Making these improvements can reduce renter turnover and lead to lower operating costs.
- Priority for Solar Project funding of up to $75,000 per project
Owners of market-rate multifamily properties that meet the following criteria:
- At least 20% of the rental units in a building are affordable to households whose family income is at or below 60% of the Area Median Income.
- Existing tenants in units that have program compliant rents do not need to be income qualified.
- Going forward, income qualification for tenants is determined upon initial occupancy. Thereafter, increased incomes of tenants in affordable units will not violate the program requirements.
- Tier 1 or 2 rental license with no rental housing license revocations or outstanding housing orders.
- The building or tax parcel must have at least 2 units.
- Buildings can include units with owner occupants, but only rental units are eligible for 4d tax status.
Property owner commitment
Record a 10-year affordability declaration on your property stating:
- At least 20% of units at a property (e.g. 2 units at a 10-unit property) will remain affordable to households making 60% of Area Median Income (AMI). You may enroll up to 100% of the units in the building.
- As units turn over, new tenants must have household incomes at or below 60% of AMI. For 2019-2020, maximum incomes are: $42,000 for one person; $48,000 for two people; $54,000 for three people; $60,000 for 4 people; $64,800 for 5 people. Building owners do not need to verify incomes of existing tenants. The property owner must verify tenant incomes and report them to the City on an annual basis.
- Rent increases for tenants in affordable units are limited to 6% or less annually, unless the unit is turning over to a new tenant or the owner provides evidence that a larger rent increase is needed to address deferred maintenance or unanticipated operating cost increases.
- Property owner or manager commits to accepting tenant based assistance (e.g. Section 8 vouchers) and agrees to affirmatively market vacancies by advertising units on HousingLink.org.
- If a building is sold, declarations run with the property.
Application process and timeline
- October 1, 2019 – City begins accepting applications through the online application portal.
- All applicants must complete an application checklist, online application, and rent roll using the City’s template.
- Applicants with multiple buildings should submit multiple applications.
- Applicants should submit their applications as soon as possible for fastest review and processing by City staff. Early applications will be reviewed on a first come, first serve basis.
- January 8, 2020 – Final submission deadline. Applications can be submitted here.
- February 14, 2020 – City staff will send a 4d Participation Agreements, Declarations. LIRC applications, and the 4d enrollment checklist to all accepted applicants for signature. Applicants must also sign up as bidders or suppliers using the City’s eSupplier portal. Early applicants may receive materials early for expedited enrollment.
- February 2020 – City staff will offer in-person opportunities for participants to sign documents in the presence of a City notary, and to ask questions to 4d program staff.
- March 9, 2020 at 5:00 p.m. – Deadline for selected applicants to submit signed Minnesota LIRC application, signed City participation agreement and affordability declaration (PDF), LIRC application, to complete the eSupplier application, and complete the application checklist.
- Prior to March 31, 2020 – City submits LIRC applications to Minnesota Housing on behalf of all selected applicants
- May - June 2020 – Applicants receive Minneapolis 4d incentive grants ($100 - $1,000 per property) via US mail
Compliance requirements and deadlines
- January 31 – Annual Compliance Form (xls) is due to the City of Minneapolis by January 31st. This form must be completed and submitted for review yearly.
- March 31, 2020 – The Minnesota LIRC re-application form must be submitted separately by participants to Minnesota Housing before March 31st. Minnesota Housing will send this form to you each year by mail, and the form must be submitted yearly in order to maintain ongoing 4d tax status.
- All new households that move in after you enroll in the 4d program must be certified as income qualified for your 4d units. Household income must be verified via an applicant’s prior year IRS 1040 form.
- All adult applicants must complete the 4d Government Data Practives Act form.
- Applicants who do not file a federal tax return must also sign Attachment 1 to the 4d GDPA form and provide alternative third party documentation of income. Examples of acceptable alternative documentation include paystubs and Social Security benefit letters. Calculate household income by annualizing gross income received multiplied by the number of pay periods or disbursements per year.
- Program participants familiar with Low Income Housing Tax Credit rules for verifying and calculating household income may instead elect to use those procedures for certifying an applicant’s eligibility.
- Verified income and monthly rent charged for your 4d units must be recorded in the Annual Compliance form (xls). The City of Minneapolis will review this document for completion.
- Annual Compliance form (xls) should reflect all activity for the taxable year. For the first year of participation, this time period will be the date of your declaration through 12/31.
- More information for 4d tenants and applicants.
Other important dates
- Green Cost Share (PDF) annual application deadlines – funds are first come, first serve
- 4d Energy Efficiency – March 1, May 1, July 1
- 4d Solar Projects – December 1, February 1, April 1
- August (annually) – Minnesota Housing certifies LIRC (4d) classifications. If an applicant applies for 4d status during the October 2019 to January 2020 application cycle, Minnesota Housing would certify 4d status for that property by August 2020.
- November (annually) – 4d program participants receive a notice of proposed levies and taxes. If an applicant applies for 4d status during the October 2019 to January 2020 application cycle, they would receive a notice reflecting lower taxes in November 2020.
- Annually, one year after applying for the Minneapolis 4d program – program participants will receive tax bills, which will have a pro-rated reduction of ~40% per unit. If an applicant applies for 4d status during the October 2019 to January 2020 application cycle, their 2021 tax bill will be the first bill to reflect the lower 4d tax rate. This lag time exists because an applicant cannot receive 4d status until Minnesota Housing certifies LIRC status, which happens in August each year.
Selling your property?
The City works several with non-profit partner organizations that can buy properties and help apartments stay affordable by utilizing City financing. For more information, please email [email protected] or call 612-673-5055.
Last updated Jan 2, 2020