Purpose

This bill makes widespread changes to Minnesota housing policy. It expands and changes how the Minnesota Housing Finance Agency (MHFA) provides financing and grants for affordable housing, rental assistance, safety upgrades, and related programs. It also adjusts rules for local housing funds, public corporations that own rental property, and the use of certain public funds to support housing projects.

Article 1: Minnesota Housing Finance Agency

• Purpose of MHFA programs and funding

  • The agency’s financial help covers all forms of assistance (loans, grants, tax credits, guarantees, insurance, etc.) to develop, rehabilitate, or retrofit multiunit housing, including federal low-income housing credits.

• Rights and information for landlords and tenants

  • The agency must publish information explaining the rights and responsibilities of landlords and residential tenants and prominently display it on its website.

• Rental assistance program administration

  • MHFA may grant funds to program administrators to run rental assistance programs (tenant-based or project-based). The administrator can use a formula to determine grant amounts and must pay assistance directly to housing providers. Funds should be distributed statewide, with priority given to households with children and incomes up to 30% of the area median income (AMI). Administrators can use their own procedures, but MHFA must approve them and can reallocate unused funds to improve efficiency. Priority is for households with kids and very low income; local priorities can be added.

• School-based home ownership initiatives

  • Schools (districts, cooperative units, or charter schools) can receive grants to help build homes for owner occupancy. Future occupants must participate in homeownership education and counseling. Nonprofit groups contracted by the school may also participate.

• Housing infrastructure bonds and grant programs

  • The bill authorizes up to $30 million in housing infrastructure bonds to fund projects including:
  • Supportive housing (with at least 50% of units set aside for people who are without permanent residence).
  • Acquisition/rehabilitation of foreclosed or abandoned housing for affordable rental or owner-occupied housing.
  • Community land trusts and land acquisition for low/moderate-income buyers.
  • Manufactured home parks, senior housing, and projects housing households at or below 50% AMI or other targeted income levels.
  • Preservation/redevelopment of federally assisted rental housing and refinancing of related costs.
  • Special priorities and balancing:
  • Preference for permanent supportive housing for veterans and those at risk of homelessness.
  • Prioritize senior housing projects that stay affordable, leverage LIHTC, provide services, and improve supports for aging residents.
  • Try to balance loans between the metropolitan area and outside areas, and between counties/cities with different population sizes.

• Grant and loan requirements

  • Grants/loans may not cover more than 50% of a project’s cost. Funding requires matching from local government, businesses, nonprofits, or tribes at a ratio of 1-for-2 (one part local match for every two parts MHFA funding). If funds come from the Minnesota housing tax credit account, that can count toward the match.

• Use of funds and project eligibility

  • MHFA can award grants and loans for workforce housing and for multifamily/single-family developments serving low- and moderate-income households. This includes gap financing and options to reduce costs through regulatory changes or waivers (e.g., density, site standards, zoning).
  • Recipients must meet income limits and other restrictions; disqualified individuals or entities have to disclose conflicts of interest before applying. Eligible recipients include cities, tribes, tribal housing corporations, private developers, nonprofits, housing authorities, etc., and projects must serve households within income limits.

• Local and regional housing funds

  • The bill defines local and regional housing trust funds and how they’re created and managed. It also establishes rules for using such funds to support housing, with attention to dedicated public revenue sources.

• Local housing trust fund grants and onetime appropriation

  • There is a one-time appropriation for Local Housing Trust Fund grants to incentivize local funding. Grants can equal the public revenue committed to the local fund (up to $150,000) plus a portion of additional revenue above that amount, with caps. Funds must be used within a specified period and the balance returned if not needed for housing purposes.

• High-rise sprinkler system grants and loans

  • A new Highrise Sprinkler System Grant/Loan Program provides funds to install sprinkler systems in eligible tall buildings (7 stories or more, or 75 feet high with most units affordable to low/moderate-income households paying no more than 30% of income). Nonprofits have shown preference for funding. Grants have specific maximums and matching requirements (25% match for nonprofits, 50% for for-profits).

• Accessibility requirements for new construction

  • When funding new construction with more than four units, developers must include at least:
  • One unit or 5% of units that are accessible (with features like roll-in showers, accessible kitchens, etc.), and the greater of those numbers or specific accessible/sensory-accessible features (soundproofing between shared walls, non-fluorescent lighting, low-emission materials).
  • Other accessibility rules still apply as required by code.

Article 1: Other notable MHFA changes

• 462A.051 and related sections updated to clarify that MHFA provides all forms of financial assistance and that federal low-income housing credits are part of the process.
• Changes to grant/loan programs aim to ensure funds can support a broader mix of housing and safety improvements while promoting affordability and local investment.
• Expanded reporting and transparency on rights-and-obligations materials for landlords and tenants.

Article 1: Local funds and administrative rules (summary)

• The bill strengthens the role of local and regional housing funds and the use of matching funds to maximize local investments in housing.
• It creates tighter rules for eligibility and disclosure to prevent conflicts of interest in funding decisions.
• It emphasizes that projects should maximize affordability, leverage other funding sources (like LIHTC), and deliver services or supports as residents age.

Article 2: Public Corporation for Rental Property

• Liability and assets of public corporations

  • The state would not be liable for obligations of a public corporation created by statute. If such a public corporation dissolves, its assets may become state property, with certain exceptions. This provision does not apply to public corporations governed by specific laws that are listed as exceptions.

• General intent

  • These changes aim to clarify who bears responsibility for debts and obligations tied to public rental property corporations and to specify what happens to their assets after dissolution.

Significant changes to existing law (high-level)

• Expands MHFA’s financing toolkit and target populations (e.g., very low-income households, veterans, seniors) and adds new grant/loan programs (high-rise sprinklers, school-based homeownership, etc.).
• Creates and funds local/regional housing trust funds with matching requirements and clearer rules for spend-down timelines and accountability.
• Establishes new public safety upgrades (high-rise sprinkler systems) with affordability and accessibility considerations.
• Adds consumer-facing requirements for landlord/tenant information, promoting awareness of rights and obligations.
• Tightens eligibility rules and conflict-of-interest disclosures for MHFA funding recipients.
• Clarifies state liability related to public rental-property corporations and the fate of their assets upon dissolution.

Quick takeaway

If you work in housing, urban planning, or local government, this bill would broaden MHFA’s funding options, promote more affordable and accessible housing, push for safety and energy-efficiency upgrades, and encourage local investment through housing trust funds—while clarifying who bears financial responsibility for certain public rental property entities.

Relevant Terms - Minnesota Housing Finance Agency - rental assistance - tenant-based assistance - project-based assistance - affordable housing - area median income (AMI) - local housing trust fund - regional housing trust fund - community land trusts - housing infrastructure bonds - permanent supportive housing - veterans housing - senior housing - housing and redevelopment authority - public corporation for rental property - highrise sprinkler system program - grants - loans - matching funds - disqualified individuals - disqualified businesses - credit certificates / LIHTC (federal low-income housing credits) - accessibility requirements (roll-in showers, sensory-accessible features) - local government and local revenue sources for housing - foreclosure/abandoned housing rehabilitation - manufactured home parks - owner-occupied housing - zoning and regulatory waivers - income limits - service provisions for aging residents