HF5158

Purpose

• Expand how local affordable housing aid can be used and adjust the rules for spending that aid.
• Update Minnesota law to broaden what qualifies for aid, who can benefit, and how projects must be financed and operated.
• Improve the availability of affordable housing and enhance accessibility and energy efficiency in new and rehabilitated housing.

Main provisions

• Qualifying projects (expanded list)

  • Emergency rental assistance for households earning less than 80% of the area median income (AMI), as defined by HUD.
  • Financial support to nonprofit affordable housing providers to create or preserve safe, dignified, affordable, and supportive housing.
  • Projects for construction, acquisition, rehabilitation, demolition or removal of existing structures, and related financing (construction financing, permanent financing, interest rate reductions, refinancing, and gap financing) to provide affordable housing.
  • Housing designed for households with incomes at or below 115% of the greater of state or area median income for homeownership projects; and 80% of the greater of state or area median income for rental housing projects.
  • Supportive housing operations, including funding for supportive services or staff, potentially as a capitalized reserve or ongoing funding.
  • Costs of operating emergency shelter facilities and related services.

• Income-based priorities

  • Priority given to projects serving households under 80% AMI for homeownership and under 50% AMI for rental housing.
  • Preference for projects that reduce disparities in home ownership, reduce housing cost burden, reduce housing instability or homelessness, improve housing habitability, create accessible housing, or increase energy- or water-efficient homes.

• Gap financing

  • Defined as either the difference between total property costs (including acquisition, demolition, rehabilitation, and construction) and the market value at sale, or the difference between project costs and the amount a targeted household can afford based on industry standards.

• Demolition and land use

  • If aid is used for demolition, the cleared land must be used to construct housing for people meeting the income limits.

• Accessibility requirements for larger new constructions

  • For buildings with more than four units, the project must include:
  • At least one accessible unit or at least 5% of units accessibility, with features such as at least one roll-in shower, accessible water closet, and accessible kitchen work surface meeting state accessibility provisions.
  • At least one accessible unit or 5% of units that are sensory-accessible, including:
    • Soundproofing between shared walls on first and second floors
    • No fluorescent lighting in units and common areas
    • Low-fume paint
    • Low-chemical carpet and low-chemical carpet glue
  • These accessibility requirements do not relieve projects from meeting other applicable accessibility standards.

• Supportive services and operations

  • Financial support to nonprofit housing providers may be used to fund operations, management, and supportive services for supportive housing.
  • Eligible uses include funding for operating costs of affordable housing and for services that support residents.

Significant changes to existing law

• Expanded eligible uses of local affordable housing aid to cover more project types (including ongoing operations and supportive services) and a broader mix of financing and construction activities.
• Updated income thresholds and targeting rules (80% AMI for homeownership; 50% AMI for rental) to guide which households projects should prioritize.
• Added explicit requirements for accessibility in larger multi-unit developments, including both traditional accessible features and sensory-accessible accommodations.
• Introduced or clarified the concept of gap financing and tied it to project costs and affordability.
• Tied demolition/land reuse to future housing for qualifying income groups.
• Integrated energy- and water-efficiency considerations into project eligibility and design.

Practical impact (what this means for you)

• More housing projects may qualify for local affordable housing aid, including those focused on supportive housing and emergency shelter operations.
• Projects are more likely to incorporate accessible and sensory-friendly design features, especially in larger buildings.
• Local housing aid decisions will consider whether projects help reduce disparities in ownership, affordability, and housing stability.
• Authorities have new or clarified rules about how aid can be spent over time and what kinds of financing can be used.

Relevant Terms - local affordable housing aid - qualifying projects - emergency rental assistance - households earning less than 80 percent of area median income - HUD (U.S. Department of Housing and Urban Development) - homeownership projects - rental housing projects - 115 percent of the greater of state or area median income - 80 percent of the greater of state or area median income - gap financing - demolition or removal of existing structures - affordable housing - construction financing - permanent financing - interest rate reduction - refinancing - supportive housing - supportive services - operating costs - emergency shelter facilities - priority for income limits (80% AMI homeownership; 50% AMI rental) - disparities in home ownership - housing cost burden - housing instability - homelessness - habitability - accessible housing - energy-efficient homes - water-efficient homes - units that are accessible (roll-in shower, water closet, kitchen work surface) - Section 1002 of the current State Building Code Accessibility Provisions for Dwelling Units in Minnesota - sensory-accessible units - soundproofing between shared walls - no fluorescent lighting - low-fume paint - low-chemical carpet and carpet glue