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Bill would update 4(d) property classification to allow income‑averaging for low‑income housing projects
Summary
Senate File 33 would clarify Minnesota's '4d' property tax classification to allow income averaging for qualified low‑income housing projects, aligning state statute with current Minnesota Housing Finance Agency interpretation and federal changes.
Senate File 33, presented by Senator Rest, would amend the property‑tax classification commonly known as “4d” to allow an income‑averaging approach when determining whether a low‑income housing project qualifies for the classification.
Under current practice, 4d qualification focuses on specific income and rent‑restriction percentages measured at initial occupancy. Senator Rest said the bill replaces a unit‑by‑unit percentage test with an income‑averaging method so a building can include a mix of deeper‑affordability units and higher‑AMI units that average to the statutory threshold. He said the change mirrors a federal update from 2018 and conforms Minnesota statute to current Minnesota Housing Finance Agency (MHFA) interpretation.
Ward Inos, testifying for the 4d Affordable Housing Coalition (which includes for‑profit and nonprofit developers responsible for roughly 80% of the state’s affordable units), described the bill as “clarifying conforming language that is consistent with MHFA's current interpretation of the income averaging statute.” He said income averaging “facilitates the development of more deeply affordable housing units” by allowing, for example, 80% AMI units to be developed alongside 30% AMI units as long as the building averages to 60% AMI overall.
Committee members noted the measure had been included briefly in prior tax legislation; the committee laid the bill over for possible inclusion.
