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Minneapolis encourages landlords to apply for tax breaks in exchange for keeping rent cheap

It wants building owners to sign up for 4d status.
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With Minneapolis the ground zero of rising housing costs in Minnesota, the city is looking to work with landlords to keep rents down.

Mayor Jacob Frey made affordable housing one of the key pledges of his campaign, and the city revealed on Thursday a plan to do more to encourage landlords to cater for low-income tenants.

Currently, eligible apartment building owners can apply for 4d status from the state, which gives them property tax breaks of up to 40 percent provided 20 percent of their units are considered "affordable" for renters.

The new pilot program that Minneapolis City Council is in the process of approving will help these building owners apply for the benefits.

Those that qualify will get the "financial assistance and documentation needed to file for this status and cover the cost of the application fees."

Related:

– St. Louis Park approves unique rules to protect low-income renters.

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It's hoped that the ordinance will encourage building owners to keep rents affordable, given that applying for the tax break requires a pledge to keep rents down for 10 years in a portion of their units.

As well as the tax break, applicants will also be able to access free energy efficiency and healthy home audits provided by the City, as well as subsidies and rebates for any energy efficiency improvements made to buildings.

“By promoting sustainability and meeting property owners where they are with strong, smart incentives like a property tax break, we can help maintain affordable rental rates for tenants and preserve existing affordable housing for Minneapolis," Mayor Frey said in a statement. 

Efforts to tackle housing crisis

A unit qualifies as affordable under the 4D program when the rent is comfortable for a household with an income of 60 percent or less of the median area income – which in Minneapolis is $37,980 for one person and $43,440 for two.

In terms of the rental cost, that's (a still pretty steep) $1,017-a-month for a one-bedroom property and $1,221 for two-bedrooms.

St. Louis Park earlier this week approved its own efforts to protect low-income renters, by implementing policies whereby new building owners have to pay their moving costs if they hike rents within 3 months of buying the property.

It comes amid a housing crisis in the Twin Cities, with a dearth in housing supply resulting in a 12 percent drop in home sales in March, the Star Tribune reported.

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