4d Affordable Housing Incentive Program
Affordable, safe, and stable housing is vital to a community's well-being and prosperity. Due to current market trends, already burdened low- to moderate-income residents are spending more than 30 percent of their income on housing and utilities, and many rental property owners face increased operating costs, maintenance costs, and property taxes.
The City of Golden Valley's 4d Affordable Housing Program offers incentives that reduce property tax liability, with the ultimate goal of preserving affordability and strengthening the bottom line for rental property owners. The Golden Valley Housing and Redevelopment Authority (HRA) receives and reviews 4d Program applications annually and accepts applications from January 1 through February 29 (28 in non-leap years). See the "How To Participate" tab for the application timeline.
- 10-year eligibility for 4d property tax rate, providing a 40 percent tax rate reduction on qualifying units (see note below)
- Payment of the first-year application fee to the State of Minnesota for certification of the 4d property tax classification ($10 per unit, capped at $150 per property)
- One-time $100 grant per affordable unit, capped at $1,000 per unit
- Free energy efficiency and healthy homes assessments
- Payment of the recording fee for the declaration against the property for 10-year affordability
- Potentially reduced renter turnover due to tenant stability
- Lower maintenance and operating costs, if owners take advantage of opportunities to make energy efficiency improvement to properties
Note: Minnesota Statute 273.128 provides that qualifying low-income rental properties, including those enrolled in the Golden Valley 4d Affordable Housing Program, are eligible for 4d tax classification. According to State statute, the first tier of valuation ($139,000/unit in 2018) on 4d rental properties is taxed at a rate 40 percent less than 4a or 4b rental property. The actual reduction in property taxes may be slightly higher or lower than 40 percent.
To be eligible for the 4d Program, owners of multi-family rental properties must:
- have at least 10 units in the building or tax parcel
- have the ability to register at least 20 percent of the rental units in a building to be affordable to households whose family income is at or below 60 percent of the area median income
- be a licensed rental property in good standing with no code compliance violations
- be rental units, not units with owner occupants
Property owners must record a 10-year affordability declaration on their property stating the following:
- At least 30 percent of the units remain affordable to households making 60 percent of the area median income. Up to 100 percent of the units in the building may be enrolled.
- Rent increases for tenants in affordable units are limited to 5 percent 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 remain with the property.
Timeline
- January 1, 2020 - City begins accepting applications. The application asks applicants to provide signed City participation agreement and affordability declaration, a rent roll for units they wish to designate as 4d, and also a signed and certified copy of the Minnesota Low Income Rental Classification (LIRC) application. On the LIRC application, the City will fill out all sections other than the certification and signature, which must be completed by the property owner. Applicants with multiple properties must submit multiple applications.
- February 29, 2020 - Deadline for selected applicants to submit signed Minnesota LIRC application, signed City participation agreement, and affordability declaration.
- March 31, 2020 - City submits LIRC applications to Minnesota Housing on behalf of all selected applicants.
- Summer/Fall 2020 - Applicants submit a W-9 and proof of 4d certification to be eligible to receive Golden Valley 4d grants ($100 to $1,000 per property).
Other Important Dates
- August 2020 - Minnesota Housing certifies LIRC (4d) classifications.
- November 2020 - 4d program participants receive a notice of proposed levies and taxes for 2020. This notice will reflect the LIRC (4d) classification.
- March 2021 - Annual Compliance Form due. Each year until March 2034, Golden Valley 4d participants will be required to submit compliance forms to the City prior to submitting LIRC re-application paperwork to the State.
- March 31, 2021 - Property owners submit Minnesota LIRC re-application paperwork to Minnesota Housing. Re-application paperwork must be submitted annually to retain 4d status.