Expand the low-cost housing supply and lower housing costs in Minnesota.

 

This legislation aims to expand affordable housing in Minnesota by increasing the supply of housing units, stabilizing

rent costs, and supporting low- to moderate-income families.

To achieve these goals, the state will:

1. Fund the construction and rehabilitation of 10,000 or more affordable housing units over a period of 5 years.

2. Eligible housing must set rents at no more than 30% of household income for residents earning up to 60% of the area

median income (AMI).

3. Developers receiving state funding must reserve and designate at least 20% of units as “affordable” for 30 years.

4. Cities will provide priority funding for projects near public transit, schools, or employment centers.

 

Minnesota faces a statewide shortage of affordable housing, with thousands of families spending more than 30% of their

income on rent. According to the National Low Income Housing Coalition's (NLIHC) "The Gap: A Shortage of Affordable

Homes" report, Minnesota needs 101,000 more affordable homes for extremely low-income renters. This bill’s

implementation to fight the affordable housing crisis is a step in the right direction in combating a very serious

affordable housing problem that affects Minnesota and its cities. Affordable housing improves economic mobility, reduces

homelessness, and allows workers to live near their jobs. Expanding affordable housing will strengthen communities,

reduce homelessness, and support economic stability across the state.

 

1. City/township - A large, incorporated municipality/An administrative subdivision of a county

2. Resident - A person who lives somewhere permanently or on a long-term basis

3. “Affordable” Housing Unit - residences where housing costs (rent/mortgage plus utilities) do not exceed 30% of a

household's gross income

4. Real Estate Transfer Tax - A one-time government fee imposed on the transfer of ownership or title of real property

from one party to another.

5. Area Median Income (AMI) - The midpoint of a region's income distribution in an area with half of the residents

earning less and vice versa.

6. Minnesota Housing Trust Fund - A program that provides funding for the creation and preservation of affordable rental

housing for low-income families.

 

1. A 0.25% increase in the state real estate transfer tax on properties valued above $750,000.

2. $100 million redirected from the state’s budget surplus into the Minnesota Housing Trust Fund.

3. Optional partnerships with local housing authorities such as the Minneapolis Public Housing Authority (MPHA), the

Saint Paul Public Housing Agency (SPPHA), and the Metro Housing and Redevelopment Authority (HRA).

 

The Minnesota Housing Finance Agency (MHFA) will oversee all grants and compliance.

Developers who fail to maintain affordability requirements will face:

- Repayment of state funds plus a 10% penalty, and ineligibility for future housing grants for a period of 5 years.

- Additionally, annual audits will ensure compliance with public reports released each fiscal year. Audits will be

conducted through a combination of on-site inspections, a thorough review of financial and operational records, and

comprehensive compliance checks with regulations. These multifaceted examinations are designed to ensure rigorous

enforcement and strict adherence to the law across all scrutinized units and landowners. This approach allows auditors

to gather both qualitative and quantitative evidence, providing a holistic view of the operations and compliance status

of all properties.

 

This legislation will take effect January 1, 2027.