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Local Affordable Housing Aid
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Local Affordable Housing Aid helps metropolitan local governments develop and preserve affordable housing within their jurisdictions to keep families from losing housing and to help those experiencing homelessness find housing. Aid will begin in 2024.
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The Department of Revenue certifies preliminary distribution factors for eligible counties and cities by August 1 each year. We base this certification on current statutes, including any changes from the most recent legislative session.
Revenue also posts aid amounts after they are calculated each year and before the first-half payment on July 20.
The certification of preliminary distribution factors and posting of final aid amounts are accompanied by summaries explaining how each was calculated.
Local Affordable Housing Aid is paid in two equal installments in the year aid is calculated and is based on the amount available as of June 1 of that year. The first half is paid on July 20 and the second half on December 26.
Funds distributed under this aid program must be spent on a qualifying project.
Funds will be considered spent if both of these conditions are met:
- A county or eligible city demonstrates to Minnesota Housing that the city or county cannot expend funds on a qualifying project by the deadline below due to factors outside the control of the city or county
- The funds are transferred to a local housing trust fund
If funds are transferred to a local housing trust fund, they must be spent on a project or household that meets the affordability requirements described below.
Deadline: Funds must be spent by December 31 of the fourth year after the aid was received.
Qualifying projects include:
- Emergency rental assistance for households earning less than 80 percent of area median income as determined by the United States Department of Housing and Urban Development
- Financial support to nonprofit affordable housing providers in their mission to provide safe, dignified, affordable and supportive housing; and
- Projects designed for the purpose of construction, acquisition, rehabilitation, demolition or removal of structures, construction financing, permanent financing, interest rate reduction, refinancing, and gap financing of housing to provide affordable housing to households that have incomes which do not exceed:
- For homeownership projects, 115% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development
- For rental housing projects, 80% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development
- Housing developed or rehabilitated with funds under this section must be affordable to the local work force
Projects are prioritized that provide affordable housing to households that have incomes that:
- For homeownership projects, do not exceed 80 percent of the greater of state or area median income as determined by the United States Department of Housing and Urban Development
- For rental housing projects, do not exceed 50 percent of the greater of state or area median income as determined by the United States Department of Housing and Urban Development.
Priority may be given to projects that:
- Reduce disparities in home ownership
- Reduce housing cost burden, housing instability, or homelessness
- Improve the habitability of homes
- Create accessible housing
- Create more energy- or water-efficient homes
Gap financing is the difference between the costs of the property and either:
- The market value of the property upon sale; or
- The amount the targeted household can afford for housing, based on industry standards and practices.
If aid received under this program is used for demolition or removal of existing structures, the cleared land must be used for the construction of housing to be owned or rented by persons who meet the income limits described above.
If an aid recipient uses the aid on new construction or substantial rehabilitation of a building containing more than four units, the loan recipient must construct, convert, or otherwise adapt the building to include:
- The greater of:
- At least one unit
- At least 5% of units that are accessible units, as defined by section 1002 of the current State Building Code Accessibility Provisions for Dwellings Units in Minnesota, and include at least one roll-in shower
- The greater of
- At least one unit
- At least 5% of units that are sensory-accessible units that include:
- Soundproofing between shared walls for first and second floor units
- No florescent lighting in units and common areas
- Low-fume paint
- Low-chemical carpet
- Low-chemical carpet glue in units and common areas
These guidelines do not relieve a project funded by this aid program from meeting other applicable accessibility requirements.
Beginning in 2025, aid recipients must submit a report annually, no later than December 1 of each year, to Minnesota Housing. The report must include documentation of the location of any unspent funds distributed under this section and of qualifying projects completed or planned with funds under this section.
