The Minneapolis 4d program:
- Preserves affordable homes in Minneapolis
- Helps rental property owners get property tax reductions if they agree to keep 20% or more of their rental units affordable
- Helps owners make existing buildings greener through cost sharing for energy efficiency improvements and solar installations
Recent changes
New for 2023-2024: We are adding 2023 Minnesota Legislature changes to our 4d program. This will be effective for the 2024 tax assessment year.
- The 4d program for rental housing is now the 4d(1) program.
- The program has a uniform tax class rate of 0.25%. This replaces the previous tiered classification rate.
- These tax savings will be used on:
- Property maintenance
- Property security
- Improvements to the property
- Rent stabilization or increases to the property’s replacement reserve account
- 2023 applications to the City’s 4d program may be required to provide additional documentation.
Resources
- 4d Affordable Housing Incentive Program Guide
- Watch a video about the 4d program
- View a presentation about the 4d program
- Read a report about the 4d program
- See a list of current 4d participants
- See common questions compiled by the Family Housing Fund
Affordable housing criteria
Rent is affordable to households making less than 60% of Area Median Income (AMI). Maximum rents for 2023-2024 are as follows:
Single room occupancy (SRO) housing, rooming houses and group homes have rent limits based on the number of bedrooms. For this type of housing, the maximum rent limit is $783.
- Studio/Efficiency $1,305
- 1 Bedroom $1,398
- 2 Bedrooms $1,677
- 3 Bedrooms $1,938
- 4 Bedrooms $2,161
- 5 Bedrooms $2,385
As units turn over, affordable units are rented to households making less than 60% of AMI. In 2023-2024 this means that units must be rented to households making no more than the following amounts:
- $52,200 for one person
- $59,640 for two people
- $67,080 for three people
- $74,520 for four people
- $80,520 for five people
- $86,460 for six people
- $92,460 for seven people
- $98,400 for eight people
Benefits for property owners
- 10-year eligibility for 4d property tax rate, also known as the Low Income Rental Classification (LIRC) which provides a tax rate reduction on qualifying units. Other details about the property can impact the rate reduction, and changes in property value impact overall tax burden. For more information, see Minnesota Statute 273.128.
- Grant of $100 per affordable unit, capped at $1,000 per property
- Payment of first year LIRC fees to the State of Minnesota
- Green Cost Share funding up to $50,000 per building (up to 70% of project costs) with eligibility determined by a free energy assessment; and Solar Energy incentives up to $50,000 per project.
Program eligibility guidelines
Owners of market-rate rental properties must meet the following criteria:
- Nearly all rental housing is eligible. This includes small 1-4 unit buildings as well as large properties. Single room occupancy (SRO) housing, rooming houses, group homes are also eligible.
- At least 20% of the rental units in a building are affordable to households whose family income is at or below 60% of 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.
- Buildings can include units with owner occupants, but only rental units are eligible for 4d tax status.
- Building does not already qualify for LIRC tax status in Minnesota
- Market rate new construction projects with at least 20% affordable units can receive up to a $100,000 incentive if pursuing ENERGY STAR, Zero Energy Ready, or Passive House Institute US (PHIUS) certification.
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. The property owner must verify new tenant incomes and report them to the City on an annual basis. Building owners do not need to verify incomes of existing tenants.
- Rent increases for tenants in affordable units are limited to 6% or less annually, unless the unit is turning over to a new tenant
- 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.
Modifications to 4d program commitments
Property owners can reduce the number of units in the 4d program if they originally opted for a higher than required level of participation (20% of units in a building).
Application process and timeline
November
- We will activate the online application portal on November 13 , and will accept applications until January 11, 2024 at 5 p.m. All applicants must complete an application checklist , and Rent Roll Template .
- Applicants with multiple buildings or condo/townhome units in the same building must submit multiple applications for each building or condo/townhome unit.
- 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
The 2023-2024 application deadline is January 11, 2024. The next application window will be November, 2024 - January, 2025.
February
City staff will send enrollment paperwork to accepted applicants for review and signature, typically by early to mid-February. Standard forms of agreement can be reviewed at any time, and include the 4d Participation Agreement and Declaration of Restrictive Covenants . In addition, applicants will need to complete a W9 and City ACH transfer form to receive the 4d enrollment grant, as well as the State of Minnesota’s which is necessary to receive 4d tax status.
Applicants will have 2-3 weeks to review and complete enrollment paperwork after receiving it. Given the limited timeline for enrollment, we recommend that applicants review the standard forms of agreement and seek outside legal or tax advice prior to receiving enrollment paperwork
Prior to March 31
City submits LIRC applications to Minnesota Housing on behalf of all selected applicants.
May - June
Applicants receive Minneapolis 4d incentive grants ($100 - $1,000 per property) via US mail.
New Construction: market rate developers should send an email during the pre-construction design phase to be considered for green construction incentives up to $100,000 per project.
Yearly compliance requirements and deadlines
January 31 – Annual Compliance form is due to the City of Minneapolis by January 31st. This form must be completed and submitted for review yearly. Instances of non-compliance include:
- Tenants with incomes over 60% AMI, unless tenants lived in the property prior to recording of the declaration.
- Rent increases of more than 6% in a year without unit turnover
- Rent over 60% AMI
- Units used for short term rentals, subleasing without income verification
- Other violations of program covenants, such as a failure to address housing code violations
Non-compliant units will face loss of LIRC (4d) tax status until they come back into compliance. If a building has a 2nd year of non-compliance, the owner must pay a fine of $500 per unit to the City.
March 31 – The 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 Practices 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. The City of Minneapolis will review this document for completion. Each year’s compliance form should reflect all activity for the taxable year. For the first year of participation, this time period will be the start date of your declaration (e.g. 3/1) through 12/31 of that year.
Other important dates
Green Cost Share energy efficiency and solar project annual application deadlines are published on the Green Cost share website.
August (annually) – Minnesota Housing certifies LIRC (4d) classifications. For example, if an applicant applies for 4d status during the Fall 2023 to January 2024 application cycle, Minnesota Housing would certify 4d status for that property by August 2024.
November (annually) – 4d program participants receive a notice of proposed levies and taxes. For example, if an applicant applies for 4d status during the Fall 2023 to January 2024 application cycle, they would receive a notice reflecting the new Low Income Rental (LIRC) rate, aka the “4d” tax rate in November 2024.
Annually, one year after applying for the Minneapolis 4d program – Program participants will receive tax bills, which will show the LIRC rate. For example, if an applicant applied for 4d status during the Fall 2023 to January 2024 application cycle, their 2025 tax bill would 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.
Small business technical assistance
Our Business Technical Assistance Program (BTAP) has contracts with a diverse network of business consultants and attorneys. You can contact them directly to get free help.
4d applicants can ask for pro bono legal advice to help them understand the legal implications of participating in the 4d program.
See the list of business consultants
Small developers technical assistance
Our Developers Technical Assistance Program (DTAP) supports small and emerging developers.
Learn about free classes, workshops and consultants
Stay informed
Sign up to receive email updates about the 4d Affordable Housing Incentive Program
Selling property
The City works several with non-profit partner organizations that can buy properties and help apartments stay affordable by utilizing City financing. In most cases, our partners are best equipped to purchase properties with 10 units or more. For more information, contact us.