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
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. In 2019, maximum incomes are $39,660 for one person; $45,300 for two people; $50,940 for three people; $56,580 for 4 people; $61,140 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.
- If a building is sold, declarations run with the property.
How to apply
- November 29, 2018 – City begins accepting applications through the online application portal. The online application asks applicants to provide a rent roll for units they wish to designate as 4d, and also includes necessary information required in the Minnesota LIRC application. The portal will allow applicants with multiple properties to submit multiple applications.
- February 1, 2019 - early deadline for Solar Energy Funding (PDF)
- February 12, 2019 at 5:00 p.m. – Submission deadline. Applications can be submitted here.
- February 26, 2019 – City notifies selected applicants via email and provides instructions about next steps.
- March 1, 2019 – First deadline for Green Cost Share funding (PDF).
- March 13, 2019, 9:00 a.m. – 5:00 p.m. – in-person opportunity to complete program paperwork offered at 105 5th Ave S, Suite 200
- March 14, 2019 at 5:00 p.m. – Deadline for selected applicants to submit signed Minnesota LIRC application, signed City participation agreement and affordability declaration (PDF), and Supplier Application including Form W-9 (PDF) (required for grant payment) to the City of Minneapolis.
- March 31, 2019 – City submits LIRC applications to Minnesota Housing on behalf of all selected applicants
- April 1, 2019 - Second deadline for Solar Energy Funding (PDF)
- April and May of 2019 – Applicants receive Minneapolis 4d incentive grants ($100 - $1,000 per property) via US mail
- May 1, 2019 – Second deadline for Green Cost Share funding (PDF)
- June 1, 2019 – Final deadline for Solar Energy Funding (PDF)
- July 1, 2019 – Final deadline for Green Cost Share funding (PDF)
Other important dates
- Aug. 2019 – Minnesota Housing certifies LIRC (4d) classifications
- November 2019 – 4d program participants receive a notice of proposed levies and taxes for 2020. This notice will reflect the LIRC (4d) classification.
- March 2020 – Annual Compliance Form (xls) due. Each year, until March 2029, Minneapolis 4d participants will be required to submit compliance forms to the City prior to submitting LIRC re-application paperwork to Minnesota.
- March 31, 2020 – Property owners submit Minnesota LIRC re-application paperwork to Minnesota Housing. Re-application paperwork must be submitted annually to retain 4d status.
Selling your property?
The City works several with non-profit partner organizations that can pay you a fair price for your property, close a transaction in a timely manner, and help apartments stay affordable by utilizing City financing. For more information, please contact Dean Porter-Nelson or (612) 673-5237.
Last updated Jan 7, 2019